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After paying a 20% deposit on a $300,000 home, David and Kennah finance the rest of the home cost and the closing fees for their home purchase with a 30-year loan for

$247,249 that charges an annual percentage rate of 3.94%. Calculate the total sum (NOT A SINGLE MONTHLY PAYMENT) of all monthly payments required to pay off this loan.
Round to the nearest whole number.

1 Answer

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Answer: The total sum of all monthly payments required to pay off this loan is $410,932.

To calculate this, we need to first find the amount of the loan that is not covered by the deposit. The deposit is 20% of $300,000, or $60,000, so the remaining amount of the loan is $300,000 - $60,000 = $240,000.

Next, we need to calculate the monthly payment on the loan. We can use the formula for a fixed-payment loan to do this:

Payment = (Loan amount x Monthly interest rate) / (1 - (1 + Monthly interest rate)^(-Number of months))

The monthly interest rate is the annual interest rate divided by 12, or 0.0394 / 12 = 0.003283.

The number of months is the number of years times 12, or 30 x 12 = 360.

Plugging these values into the formula gives:

Payment = ($247,249 x 0.003283) / (1 - (1 + 0.003283)^(-360)) = $1,151.80

Finally, we can find the total sum of all monthly payments by multiplying the monthly payment by the number of months:

Total payments = $1,151.80 x 360 = $410,932 (rounded to the nearest whole number).

Explanation:

User Kshitij Yadav
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