Question

In: Advanced Math

Please round to the nearest cent for all answers. --------------------------------------------------------------------------------- Compare the monthly payment and total...

Please round to the nearest cent for all answers.

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Compare the monthly payment and total payment for the following pairs of loan options. Assume that both loans are fixed rate and have the same closing costs.

You need a $160,000 loan.

Option 1: a 30-year loan at an APR of 7.25%.

Option 2: a 15-year loan at an APR of 6.8%.

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Find the monthly payment for each option.

The monthly payment for option 1 iswhat.

The monthly payment for option 2 is what.

(Do not round until the final answer. Then round to the nearest cent as needed.)

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Find the total payment for each option.

The total payment for option 1 is what?

The total payment for option 2 is what?

(Round to the nearest cent as needed.)

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Compare the two options. Which appears to be the betteroption?

A. Option 1 will always be the better option.

B. Option 1 is the better option, but only if the borrower plans to stay in the same home for the entire term of the loan.

C. Option 2 is the better option, but only if the borrower can afford the higher monthly payments over the entire term of the loan.

D. Option 2 will always be the better option.

Expert Solution

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Colby Messinger answered 2 years ago

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