Question: 2.7 Use PMT=P(rn) /[11(+rn)^nt] to determine the regular payment amount, rounded to the nearest dollar. The price of a small cabin is $50,000. The bank

2.7 Use PMT=P(rn) /[11(+rn)^nt]

to determine the regular payment amount, rounded to the nearest dollar. The price of a small cabin is $50,000.

The bank requires a 5% down payment. The buyer is offered two mortgage options: 20-year fixed at 8.5% or 30-year fixed at

8.5%. Calculate the amount of interest paid for each option. How much does the buyer save in interest with the 20-year option?

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