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Phil Pittman is interested in a fixed-rate mortgage for $400,000. He is undecided whether to choose a 15- or 30-year mortgage. The current mortgage rate is 4.5% for the 15-year mortgage and 5% for the 30-year mortgage. (Round your answers to the nearest dollar. Use this table, if necessary.)

Phil Pittman is interested in a fixed-rate mortgage for $400,000. He is undecided whether to choose a 15- or 30-year mortgage. The current mortgage rate is 4.5% for the 15-year mortgage and 5% for the 30-year mortgage. (Round your answers to the nearest dollar. Use this table, if necessary.)

EBK CONTEMPORARY FINANCIAL MANAGEMENT
EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter16: Working Capital Policy And Short-term Financing
Section: Chapter Questions
Problem 18P
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Phil Pittman is interested in a fixed-rate mortgage for $400,000. He is undecided whether to choose a 15- or 30-year mortgage. The current mortgage rate is 4.5% for the 15-year mortgage and 5% for the 30-year mortgage. (Round your answers to the nearest dollar. Use this table, if necessary.)

Table 14-1: Monthly Payments to Amortize Principal and Interest per $1,000 Financed Monthly Payments (Necessary to amortize a loan of $1,000) 15 20 25 30 5 10 Years Years Years Years Years 5.01 4.49 4.13 3.87 Interest Rate (%) Years 3.50 3.75 4.00 4.25 18.19 9.89 7.15 18.30 10.01 7.27 4.63 4.28 4.03 5.14 5.28 4.77 4.43 4.18 4.92 4.58 4.34 5.80 5.93 18.42 10.12 7.40 6.06 18.53 10.24 7.52 6.19 18.64 10.36 7.65 18.76 10.48 7.78 18.87 10.61 7.91 18.99 10.73 8.04 19.10 10.85 8.17 5.42 6.33 5.56 4.50 4.73 4.50 5.07 5.22 4.89 6.46 5.70 4.66 6.60 5.85 5.37 5.05 4.82 4.75 5.00 5.25 5.50 6.74 5.99 5.52 5.21 4.99 6.88 6.14 5.68 5.37 5.16 5.75 5.54 5.33 5.70 5.50 5.87 5.68 5.85 6.03 6.49 6.21 6.00 6.25 6.50 6.75 7.00 7.25 7.50 7.75 8.00 6.65 6.39 6.21 6.40 6.74 6.58 6.92 6.77 8.25 7.87 7.65 8.05 7.84 8.23 8.03 19.22 10.98 8.30 7.02 6.29 5.84 19.33 11.10 8.44 7.16 6.44 6.00 19.45 11.23 8.57 7.31 6.60 6.16 19.57 11.35 8.71 7.46 6.75 6.32 6.04 19.68 11.48 8.85 7.6 6.91 19.80 11.61 8.99 7.75 7.07 19.92 11.74 9.13 7.90 7.23 6.82 6.56 20.04 11.87 9.27 8.06 7.39 6.99 20.16 12.00 9.41 8.21 7.55 7.16 20.28 12.13 9.56 8.36 7.72 7.34 7.10 20.40 12.27 9.70 8.52 7.88 7.51 7.28 8.50 20.52 12.40 9.85 8.68 8.05 7.69 7.47 8.75 20.64 12.53 9.99 8.84 8.22 9.00 20.76 12.67 10.14 9.00 8.39 9.25 20.88 12.80 10.29 9.16 8.56 9.50 21.00 12.94 10.44 9.32 8.74 8.41 9.75 21.12 13.08 10.59 9.49 8.91 8.59 10.00 21.25 13.22 10.75 9.65 9.09 8.78 10.25 21.37 13.35 10.90 9.82 9.26 10.50 21.49 13.49 11.05 9.98 9.44 9.15 8.98 10.75 21.62 13.63 11.21 10.15 9.62 9.33 9.18 11.00 21.74 13.78 11.37 10.32 9.80 11.25 21.87 13.92 11.52 10.49 9.98 11.50 21.99 14.06 11.68 10.66 10.16 11.75 22.12 14.20 11.84 10.84 10.35 10.09 9.96 9.88 12.00 22.24 14.35 12.00 11.01 10.53 10.29 10.16 10.08 12.25 22.37 14.49 12.16 11.19 10.72 10.48 10.35 10.29 12.50 22.50 14.64 12.33 11.36 10.9 10.67 10.55 10.49 12.75 22.63 14.78 12.49 11.54 11.09 10.87 10.75 10.69 13.00 22.75 14.93 12.65 11.72 11.28 11.06 10.95 10.90 8.22 8.41 8.60 8.49 8.96 8.79 8.69 9.52 9.37 9.28 9.71 9.56 9.48 9.90 9.76 9.68 35 Years 40 Years 6.95 7.14 7.33 7.52 7.71 7.91 8.10 8.30 8.89 9.08
Transcribed Image Text:Table 14-1: Monthly Payments to Amortize Principal and Interest per $1,000 Financed Monthly Payments (Necessary to amortize a loan of $1,000) 15 20 25 30 5 10 Years Years Years Years Years 5.01 4.49 4.13 3.87 Interest Rate (%) Years 3.50 3.75 4.00 4.25 18.19 9.89 7.15 18.30 10.01 7.27 4.63 4.28 4.03 5.14 5.28 4.77 4.43 4.18 4.92 4.58 4.34 5.80 5.93 18.42 10.12 7.40 6.06 18.53 10.24 7.52 6.19 18.64 10.36 7.65 18.76 10.48 7.78 18.87 10.61 7.91 18.99 10.73 8.04 19.10 10.85 8.17 5.42 6.33 5.56 4.50 4.73 4.50 5.07 5.22 4.89 6.46 5.70 4.66 6.60 5.85 5.37 5.05 4.82 4.75 5.00 5.25 5.50 6.74 5.99 5.52 5.21 4.99 6.88 6.14 5.68 5.37 5.16 5.75 5.54 5.33 5.70 5.50 5.87 5.68 5.85 6.03 6.49 6.21 6.00 6.25 6.50 6.75 7.00 7.25 7.50 7.75 8.00 6.65 6.39 6.21 6.40 6.74 6.58 6.92 6.77 8.25 7.87 7.65 8.05 7.84 8.23 8.03 19.22 10.98 8.30 7.02 6.29 5.84 19.33 11.10 8.44 7.16 6.44 6.00 19.45 11.23 8.57 7.31 6.60 6.16 19.57 11.35 8.71 7.46 6.75 6.32 6.04 19.68 11.48 8.85 7.6 6.91 19.80 11.61 8.99 7.75 7.07 19.92 11.74 9.13 7.90 7.23 6.82 6.56 20.04 11.87 9.27 8.06 7.39 6.99 20.16 12.00 9.41 8.21 7.55 7.16 20.28 12.13 9.56 8.36 7.72 7.34 7.10 20.40 12.27 9.70 8.52 7.88 7.51 7.28 8.50 20.52 12.40 9.85 8.68 8.05 7.69 7.47 8.75 20.64 12.53 9.99 8.84 8.22 9.00 20.76 12.67 10.14 9.00 8.39 9.25 20.88 12.80 10.29 9.16 8.56 9.50 21.00 12.94 10.44 9.32 8.74 8.41 9.75 21.12 13.08 10.59 9.49 8.91 8.59 10.00 21.25 13.22 10.75 9.65 9.09 8.78 10.25 21.37 13.35 10.90 9.82 9.26 10.50 21.49 13.49 11.05 9.98 9.44 9.15 8.98 10.75 21.62 13.63 11.21 10.15 9.62 9.33 9.18 11.00 21.74 13.78 11.37 10.32 9.80 11.25 21.87 13.92 11.52 10.49 9.98 11.50 21.99 14.06 11.68 10.66 10.16 11.75 22.12 14.20 11.84 10.84 10.35 10.09 9.96 9.88 12.00 22.24 14.35 12.00 11.01 10.53 10.29 10.16 10.08 12.25 22.37 14.49 12.16 11.19 10.72 10.48 10.35 10.29 12.50 22.50 14.64 12.33 11.36 10.9 10.67 10.55 10.49 12.75 22.63 14.78 12.49 11.54 11.09 10.87 10.75 10.69 13.00 22.75 14.93 12.65 11.72 11.28 11.06 10.95 10.90 8.22 8.41 8.60 8.49 8.96 8.79 8.69 9.52 9.37 9.28 9.71 9.56 9.48 9.90 9.76 9.68 35 Years 40 Years 6.95 7.14 7.33 7.52 7.71 7.91 8.10 8.30 8.89 9.08
(a) What are the monthly principal and interest payments (in $) for each loan? 15-year mortgage $ पण 30-year mortgage $ tA (b) What is the total amount of interest (in $) paid on each loan? 15-year mortgage $ tA LA 30-year mortgage $ tA (c) Overall, how much more interest (in $) is paid by choosing the 30-year mortgage?
Transcribed Image Text:(a) What are the monthly principal and interest payments (in $) for each loan? 15-year mortgage $ पण 30-year mortgage $ tA (b) What is the total amount of interest (in $) paid on each loan? 15-year mortgage $ tA LA 30-year mortgage $ tA (c) Overall, how much more interest (in $) is paid by choosing the 30-year mortgage?
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