DI Question 9 2 pts You are thinking about getting a 30year

DI Question 9 2 pts You are thinking about getting a 30-year $200,000 mortgage at 6% interest. How much interest would you pay over 30 years? 51 9 MacBook Pro

Solution

Total interest payment is $231,676.

First step is calculation of monthly payment:

Monthly payment	=	[P * R * (1+R)^N ] / [(1+R)^N -1]
Using the formula:
Principle	P	2,00,000.00
Rate of interest per period:
Annual rate of interest		6.000%
Frequency of payment	=	Once in 1 month period
Numer of payments in a year	=	12/1 =	12
Rate of interest per period	R	0.06 /12 =	0.5000%
Total number of payments:
Frequency of payment	=	Once in 1 month period
Number of years of loan repayment	=	30
Total number of payments	N	30*12 =	360
Period payment using the formula	=	[ 200000*0.005*(1+0.005)^360] / [(1+0.005 ^360 -1]
Monthly payment	=	1,199.10
Total interest pay:
Total payments	=	1199.1*360
		4,31,676.00
Less principle amount		2,00,000.00
Interest payment		2,31,676.00