Chapter 8.7, Problem 7E

In Exercises 1-10, use

$PMT=\frac{P\left(\frac{r}{n}\right)}{\left[1-{\left(1+\frac{r}{n}\right)}^{-nt}\right]}$

to determine the regular payment amount, rounded to the nearest dollar.

In Exercises 7-8, which mortgage loan has the greater total cost (closing cost + the amount paid for points + total cost of interest)? By how much?

A $120,000 mortgage with two loan options:

Mortgage A: 30-year fixed at 7% with closing costs of $2000 and one point

Mortgage B: 30-year fixed at 6.5% with closing costs of $1500 and four points