Question

Question

You wish to take out a $375,000 mortgage, which is to be paid monthly. The yearly interest rate on the loan is 3% and the
loan is for 25 years. Calculate the total interest paid over the life of the loan.
Round your answer to the nearest dollar.
Do NOT round until you have calculated the final answer.
Provide your answer below:

Answer 1

Answer: $1778.29

$375000 = 210.878645d > d = $1778.29

Answer 2

Answer:$158,488

Explanation:

We have P0=$375,000,r=0.03,k=12,N=25, so substituting in the numbers into the formula gives

$375,000=d(1−(1+0.0312)−25⋅12)(0.0312),

that is,

$375,000=210.87645d⟹d=$1,778.2924.

To calculate the total interest, we have

$1,778.2924×25×12−$375,000=$158,488.