Concept explainers
Comparing loan options. The Aubrys plan to finance a new home through an amortized loan of $275,000. The lender offers two options: (1) a 30-yr term at an annual interest rate of 4%, compounded monthly, and (2) a 20-yr term at an annual interest rate of 5%, compounded monthly.
a. Find the monthly payments for options 1 and 2.
b. Assume that the Aubrys make every monthly payment. Find their total payments for option 1 and 2.
c. Assume that the Aubrys intend to make every monthly payment. Which option will result in less interest paid, and by how much?
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Calculus and Its Applications (11th Edition)
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