Question

Divya has a 30-year mortgage for $248,000 with a 3.8% fixed annual interest rate.What is the total interest Divya pays on her loan?

Answer 1

The rule of the fixed annual interest is

`A=P(1+r)^t`

A is the new amount

P is the initial amount

r is the rate in decimal

t is the time in years

Since the initial amount is $248,000, then

P = 248000

Since the annual rate is 3.8%, then

r = 3.8/100 = 0.038

Since the time is 30 years, then

t = 30

Substitute them in the rule above to find the new amount

`\begin{gathered} A=248000(1+0.038)^(30) \\ A=759228.12 \end{gathered}`

The new amount is $759,228.12

To find the total interest subtract P from A

`\begin{gathered} I=A-P \\ I=759228.12-248000 \\ I=511228.12 \end{gathered}`

The total interest Divya pays is $511,228.12 to the nearest cent