Most of us intuitively understand that a dollar required today does not have the same value as a dollar needed (or utilized) in the future. This is due to several factors including interest rates, compounding factors, discounting factors and financial risk. Compare the total payback for a $100,000, 5%, 15 year mortgage and a $100,000, 5%, 30 year mortgage. Suggest a reason for the difference.

Answer rating: 100% (QA)

Answer Payback of Mortgage at 5 for 15 years Year Mortgage Equated Annual Instalment Interest 5 Principal Balance 0 100000 96341898 100000 1 100000 96341898 5000 46341898 9536581 2 96341898 476829051 ... View the full answer