Question

You buy a house that costs $345,000. You put down a downpayment of 20%. You borrow the rest from the bank, who charges an annual interest rate of 4.6%. If you pay this back in 30 years, how much did the house cost you in total? A=p(1+rt) format

Answer 1

Total cost of the house = $725,880

Explanation:

This can be calculated as follows:

Down payment = $345,000 * 20% = $69,000

Amount borrowed = $345,000 * (100% - 20%) = $276,000

The total amount of loan repaid can be calculated using the following formula:

A = p(1 + rt) .................... (1)

Where;

A = Total amount of loan repaid = ?

p = Principal or amount borrowed = $276,000

r = annual interest rate = 4.6% = 0.046

t = number of years = 30

Substitute the values into equation (1), we have:

A = $276,000 * (1 + (0.046 * 30)) = $656,880

The total cost of the house can now be calculated as follows:

Total cost of the house = Down payment + Total amount of loan repaid = $69,000 + $656,880 = $725,880