Answer:
a. The amount borrowed is $95,000. The annual interest rate is 5%. The number of payments per year is 12 (monthly payments). The loan term in years is 25, and the payment amount is $450.
b. The loan requires a total of 25 x 12 = 300 payments over the full term.
To calculate the total amount paid over the full term of the loan, we can use the formula for the present value of an annuity:
PV = PMT x [(1 - (1 + r)^-n) / r]
Where PV is the present value (the amount borrowed), PMT is the payment amount, r is the monthly interest rate (5% / 12 = 0.004167), and n is the total number of payments (300).
Plugging in the values, we get:PV = $95,000
PMT = $450
r = 0.004167
n = 300PV = $450 x [(1 - (1 + 0.004167)^-300) / 0.004167] = $144,781.92
Therefore, the total amount paid over the full term of the loan is $144,781.92.