he price of a small cabin is 50 comma 000 The bank requires

he price of a small cabin is ?$50 comma 000. The bank requires a? 5% down payment. The buyer is offered two mortgage? options: 20-year fixed at 7.5?% or? 30-year fixed at 7.5?%. Calculate the amount of interest paid for each option. How much does the buyer save in interest with the? 20-year option?

Solution

Interest in 20 year fixed at 7.5% = 50*20*7.5/100 = 75

Interest in 30 year fixed at 7.5%= 50*30*7.5/100=112.5

Saving in interest with the 20 year option = 112.5-75 = 37.5