Answer:
A. $3246.74
Explanation:
The monthly payment can be found from the amortization formula.
A = P(r/n)/(1 -(1 +r/n)^(-nt))
where P is the principal amount, r is the annual rate compounded n times per year for t years.
Filling in the values, we compute the monthly payment to be ...
A = $170,000(.072/12)/(1 -(1 +.072/12)^(-12·30)) = $1153.94
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The remaining balance after t years will be ...
B = P(1 +r/n)^(nt) -A((1 +r/n)^(nt) -1)/(r/n)
For the given initial principal and the computed payment, after 18 years, the balance will be ...
B = $170000(1 +.072/12)^(12·18) -$1153.94((1 +.072/12)^(12·18) -1)/(.072/12)
B = $111,054.71
The prepayment penalty appears to be ...
(r/2)(0.80B) = (.072/2)(0.80)($111,054.71) = $3,198.38
The closest listed answer choice is ...
A. $3246.74
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Please ask your teacher how to get the answer, since none of the offered choices appear to be correct.