You want to buy a $188,000 home. You plan to pay20% as a down payment, and take out a 30 year loanat 3.4% interest for the rest.a) How much is the loan amount going to be?$b) What will your monthly payments be?$c) How much total interest do you pay?$d) Suppose you want to pay off the loan in 15 yearsrather than 30. What will your monthly payment be?$e) How much money in interest will you save if youfinance for 15 years instead of 30 years?

Given Cost of house is $188000 Down payment is 20%

Answered: You want to buy a $188,000 home. You…

You want to buy a $188,000 home. You plan to pay 20% as a down payment, and take out a 30 year loan at 3.4% interest for the rest. a) How much is the loan amount going to be? LA $

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter4: Time Value Of Money

Section: Chapter Questions

Problem 34P

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Concept explainers

Cost of Credit

The cost of credit is an extra amount that the borrower has to pay besides the loan amount. These credit charges may vary from loan to loan. The cost of credit includes interest charges, maintenance charges, and arrangement charges. Some of the costs are mandatorily collected by the lender based on the loan amount and tenure of the loan. The cost of credit is also called finance charges of the credit.

Question

100%

You want to buy a $188,000 home. You plan to pay
20% as a down payment, and take out a 30 year loan
at 3.4% interest for the rest.
a) How much is the loan amount going to be?
$
b) What will your monthly payments be?
$
c) How much total interest do you pay?
$
d) Suppose you want to pay off the loan in 15 years
rather than 30. What will your monthly payment be?
$
e) How much money in interest will you save if you
finance for 15 years instead of 30 years?

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