Question

Suppose that you are considering a conventional, fixed-rate 20-year mortgage loan for $250,000. The lender quotes an APR of 7%, compounded monthly; mortgage payments would be monthly, beginning one month after the closing on your home purchase. In the tenth year of your mortgage (months 109 through 120), what would be the total dollar amount of the interest paid? Do not round at intermediate steps in your calculation.

Group of answer choices $15,199.56 $13,159.65 $12,112.53 $14,064.27

Answer 1

So given information in this question is

Fixed rate mortgage loan = 250000

Annual rate = 7%

Monthly rate 0.58%

Thia can be solved through excel or financial calculator

Please see excel calculation in snippet For interest payment calculation function used is (=IPMT)

Or we can use financial calculator using annuity formula and compount interest formula.

I showed a calculation in excel , formulas used for that ppurpose are PMT, PPMT, IPMT.

So interest payment according to this calculation is

$               1,038.80
$               1,033.56
$               1,028.28
$               1,022.97
$               1,017.63
$               1,012.26
$               1,006.86
$               1,001.43
$                  995.96
$                  990.47
$                  984.94
$                  979.38 Total = 12112.53.

so interest payment for the mortgage payment for 10^th year is 12112.53.