Answer:
Explanation:
a) The cost of the house is $30000.
We would apply the periodic interest rate formula which is expressed as
P = a/{[(1+r)^n]-1}/[r(1+r)^n]
Where
P represents the monthly payments.
a represents the amount of the loan
r represents the annual rate.
n represents number of monthly payments.
From the information given,
a = $30000
r = 0.084/12 = 0.007
n = 12 × 3 = 36
Therefore,
P=30000/{[(1+0.007)^36]-1}/[0.007(1+0.007)^36]
P = 30000/{1.285 -1}/[0.007(1.285)]
P = 30000/[(0.285/0.008995
P = 30000/31.68
P = $947
b) The total amount that he would pay in 3years is
947 × 36 = 34092
The total cumulative interest is
34092 - 30000 = $4092