Answer:
D. $231,840
Explanation:
Total Interest = (Monthly Payment * Total Number of Payments) - Principal
Let's start by calculating the mortgage payment for the 5% interest rate. Using the following calculation to determine monthly payments:
Monthly Interest Rate = Annual Interest Rate / 12
Monthly Interest Rate = 5% / 12 = 0.05 / 12 ≈ 0.00417
Total Number of Payments = 30 years * 12 months/year = 360 months
Monthly Payment = Principal * (Monthly Interest Rate / (1 - (1 + Monthly Interest Rate)^(-Total Number of Payments)))
Monthly Payment = $120,000 * (0.00417 / (1 - (1 + 0.00417)^(-360)))
Monthly Payment ≈ $644.30
now let's calculate the total interest spent:
Total Interest = ($644.30 * 360) - $120,000
Total Interest ≈ $231,948
so after rounding, the answer is D, $231,840 (rounded to the nearest thousand btw)