Question 5: A bank offers two types of mortgage plans for a loan value of $800,000 with a down payment of 10%: Plan 1: A 40-year mortgage plan with 8% interest rate payable monthly Plan 2: A 20-year mortgage plan with 8% interest rate payable monthly a. Compute the monthly payment for each loan. b. Compute the total payment made for each loan. c. Compute the total interest paid for each loan. d. Based on the calculations, which plan should be chosen and why? What is the difference of total interest paid among the two loans?

Question 5: A bank offers two types of mortgage plans for a loan value of $800,000 with a down payment of 10%: Plan 1: A 40-year mortgage plan with 8% interest rate payable monthly Plan 2: A 20-year mortgage plan with 8% interest rate payable monthly a. Compute the monthly payment for each loan. b. Compute the total payment made for each loan. c. Compute the total interest paid for each loan. d. Based on the calculations, which plan should be chosen and why? What is the difference of total interest paid among the two loans?

Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)

7th Edition

ISBN:9780357033609

Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Chapter7: Using Consumer Loans

Section: Chapter Questions

Problem 7FPE: Calculating interest and APR of installment loan. Assuming that interest is the only finance charge,...

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Find the APR of the loan given the amount of the loan the number and type of payments, and the add on interest rate. Loan amount, $12,000; three yearly payments; rate = 8%
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