You need a $140,000 loan. Option 1: a 30-year loan at an APR of 7.5%. Option 2: a 15-year loan at an APR of 7%. Find the monthly payment for each option. The monthly payment for option 1 is $ The monthly payment for option 2 is $ (Do not round until the final answer. Then round to the nearest cent as needed.) Find the total amount paid for each option. The total payment for option 1 is $ The total payment for option 2 is $

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
icon
Related questions
Question
fixed rate and have the same closing costs.
You need a $140,000 loan.
Option 1: a 30-year loan at an APR of 7.5%.
Option 2: a 15-year loan at an APR of 7%.
Find the monthly payment for each option.
The monthly payment for option 1 is $
The monthly payment for option 2 is $
(Do not round until the final answer. Then round to the nearest cent as needed.)
Find the total amount paid for each option.
The total payment for option 1 is $
The total payment for option 2 is $
(Use the answers from the previous step to find this answer. Round to the nearest cent as needed.)
Compare the two options. Which appears to be the better option?
OA. Option 2 will always be the better option
OB. Option 1 is the better option, but only if the borrower plans to stay in the same home for the entire term of
the loan.
OC. Option 1 will always be the better option.
D. Option 2 is the better option, but only if the borrower can afford the higher monthly payments over the
entire term of the loan.
Transcribed Image Text:fixed rate and have the same closing costs. You need a $140,000 loan. Option 1: a 30-year loan at an APR of 7.5%. Option 2: a 15-year loan at an APR of 7%. Find the monthly payment for each option. The monthly payment for option 1 is $ The monthly payment for option 2 is $ (Do not round until the final answer. Then round to the nearest cent as needed.) Find the total amount paid for each option. The total payment for option 1 is $ The total payment for option 2 is $ (Use the answers from the previous step to find this answer. Round to the nearest cent as needed.) Compare the two options. Which appears to be the better option? OA. Option 2 will always be the better option OB. Option 1 is the better option, but only if the borrower plans to stay in the same home for the entire term of the loan. OC. Option 1 will always be the better option. D. Option 2 is the better option, but only if the borrower can afford the higher monthly payments over the entire term of the loan.
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 3 steps with 2 images

Blurred answer
Similar questions
Recommended textbooks for you
Essentials Of Investments
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
FUNDAMENTALS OF CORPORATE FINANCE
FUNDAMENTALS OF CORPORATE FINANCE
Finance
ISBN:
9781260013962
Author:
BREALEY
Publisher:
RENT MCG
Financial Management: Theory & Practice
Financial Management: Theory & Practice
Finance
ISBN:
9781337909730
Author:
Brigham
Publisher:
Cengage
Foundations Of Finance
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education