Question

Suppose you bought a new home for $230,000 using a 22-year mortgage with semiannual payments of $10,236.491. The annual interest rate of the mortgage is 6.9%. Right after the first 4 years (18 years left), approximately how much money have you paid in interest and how much in principal?

Group of answer choices

Interest: $81,891.93; Principal: $209,204.62

Interest: $435,917.86; Principal: $55,433.72

Interest: $61,096.55; Principal: $20,795.38

Interest: $20,795.38; Principal: $10,236.49

Answer 1

Loan value = $230,000

Semi-annual Interest rate = 6.9%/2 = 3.45%

No of payments made in first 4 years = 4 years*2 = 8

Calculating the amount of Principal and Interest paid in first 4 years using Excel "CUMPRINC" and "CUMIPMT" functions respectively:-

So, total Principal paid is $20,795.38 & Total Interest paid is $61,096.55

Option 3

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