Question

need formula for this question please! Hagan has a fixed rate mortgage of $534,000 at 5.4% for 20 years. The monthly payments are $3,643.22. How much will Hagan pay in interest after 20 years?

$874,373

$562,836

$28,836

$340,373

Answer 1

well, total cost of a loan amounts to what?

Answer 2

its not about a formula, its about understanding whats actually working in the process. afterwards you can formulate to your hearts desire.

Answer 3

Well then I don't understand, I keep getting the last one which is $340,373 I don't feel like its right

Answer 4

then lets look at it this way

do you agree that the total cost of a loan is what we pay for the loan amount and the interest?

C = L + i

Answer 5

this total cost is divided up into so many payments ... 12 times a year for 20 years

C = 12(20)(P)

since the cost doesnt change, we can equate the 2 setups and solve for interest

12(20)P = L + i

Answer 6

but they put the interest rate in there? i'm lost now

Answer 7

340 373 is fine

Answer 8

the interest rate is just extra information .... you have to be able to parse thru the information to determine what is useless and what is important

Answer 9

total payments is the total cost of the loan; which is the sum of its amount plus interest

NP = L+i

NP - L= i

Answer 10

if we needed to determine what the monthly payments would be, then interest rate is valuable .... but they already give us this so its just redundant information

Answer 11

okay soo my answer was correct right?

Answer 12

12(20)(3643.22)-(534000)

assuming my cranial math is good ... sure; lets dbl chk the wolf tho

Answer 13

http://www.wolframalpha.com/input/?i=12%2820%29%283643.22%29-%28534000%29

340 373 is fine

Answer 14

okay thank you!

Answer 15

yep