Question

Suppose you take a fixed-rate mortgage of $150,000 at 3.21% per annum for 30 years. How much of the payment is interest in 72 month?a. $349.40 b. $640.53 c. $875.56 d. $65,432 e. none of the above

Answer 1

$349.40

Step-by-step explanation:

The interest in 72 month is only obtained when an amortization table for this mortgage is constructed.

So we first need to find the annual instalment as follows :

PV = $150,000

i = 3.21%

N = 30

P/YR = 1

FV = $ 0

PMT = ?

Using a financial calculator to input the values as above, the annual instalment is $7,862.08.

In 72 months, this will be 6 years. So in the 6th year, the interest will be $4,293.52. Monthly interest will approximate $349.40 ($4,293.52 ÷ 12).