Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Transcribed Image Text:Problem: Justin and Hayley are interested in a
fixed-rate mortgage for $450,000. They are
undecided whether to choose a 15- or 30-year
mortgage. The current mortgage rate is 3.5% for
the 15-year mortgage, and 3.85% for the 30-year
mortgage.
(a) What are the monthly principal and interest
payments for EACH loan? Show your work.
(b) What is the total amount of interest paid on
EACH loan? Show your work.
(c) Overall, how much more interest is paid by
choosing the 30-year mortgage? Show your
work.
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