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Part 1

 

Use

PMT equals StartFraction Upper P left parenthesis StartFraction r Over n EndFraction right parenthesis Over left bracket 1 minus left parenthesis 1 plus StartFraction r Over n EndFraction right parenthesis Superscript negative nt right bracket EndFractionPMT=Prn1−1+rn−nt

to determine the regular payment amount, rounded to the nearest dollar. In terms of paying less in interest, which is more economical for a

$240 comma 000240,000

mortgage: a 30-year fixed-rate at

99%

or a 20-year fixed-rate at

8.58.5%?

How much is saved in interest?

 

 

Question content area bottom

 

Part 1

 

Select the correct choice below and fill in the answer box within your choice.

 

(Do not round until the final answer. Then round to the nearest thousand dollars.)

 

 

A.

The 20-year

8.58.5%

loan is more economical. The buyer will save approximately

$enter your response here

in interest.  

 

 

B.

The 30-year

99%

loan is more economical. The buyer will save approximately

$enter your response here

in interest.