Final answer:
At the end of a 15-year interest-only loan term at a 6% interest rate on $85,000, the borrower will owe $85,000, which is the original loan amount, as no principal has been paid.
Step-by-step explanation:
If a borrower gets a 15-year interest-only loan for $85,000 at a 6% annual interest rate, the borrower would need to pay interest each year, but would not have to pay down the principal during the term of the loan. The amount of interest paid annually can be found by multiplying the principal ($85,000) by the interest rate (6%). To calculate this:
$85,000 \times 0.06 = $5,100
Since it is an interest-only loan, the borrower pays $5,100 per year in interest, and after 15 years, they will have paid a total of:
$5,100 \times 15 = $76,500 in interest alone.
At the end of the loan term, the borrower would still owe the original loan amount of $85,000 because none of the principal has been paid off. Therefore, the total amount owed to the lender at the end of the loan term would be the initial principal, which is $85,000.