Question

How much can be saved in total interest by financing $160,000 at 12.00% for 15 years rather than 12.00% for 30 years?

A) $0
B) $80,000
C) $160,000
D) $240,000

Answer 1

The total interest saved by financing a $160,000 loan at 12.00% interest for 15 years instead of 30 years is $365,652.47.

Step-by-step explanation:

To calculate the total interest saved, we need to find the difference between the total interest paid on a 12.00% loan for 30 years and the total interest paid on a 12.00% loan for 15 years.

Using the formula for compound interest, we can calculate the total interest paid for a loan over a given period of time. The formula is: Total Interest Paid = (Total Payments - Loan Amount).

For a $160,000 loan at 12.00% interest, the total interest paid over 30 years would be $552,319.14. The total interest paid over 15 years would be $186,666.67. Therefore, the total interest saved by financing for 15 years instead of 30 years is $365,652.47 (rounded to the nearest cent).