You borrow $149,000 to buy a house. the mortgage rate is 7.5% and the loan period is 30 years. payments are made monthly. if you pay for the house according to the loan agreement, how much total interest will you pay?

Hi there

First find the monthly payment by using the formula of the present value of annuity ordinary

The formula is

Pv=pmt [ (1 - (1+r/k) ^ (-kn)) : (r/k) ]

Pv present value 149000

PMT monthly payment?

R interest rate 0.075

K compounded monthly 12

N time 30 years

We need to solve the formula for PMT

PMT=pv:[ (1 - (1+r/k) ^ (-kn)) : (r/k) ]

PMT=149,000: ((1 - (1+0.075:12) ^ (

-12*30)) : (0.075:12))

=1,041.83

Second find how many months in 30 years

12*30=360 months

Now find how much interest will be paid

1,041.83*360-149,000

=226,058.8 ... answer

Good luck!