Posted by **Anonymous** on Saturday, September 11, 2010 at 4:50pm.

Rebecca and Tom Payton have decided to buy a home that costs $200,000. The Paytons can put down 20% of the home's price. They have applied for a 15-year, 9% FRM to finance the balance. They Paytons have a combined gross annual income of $70,000.

A.)$ 200,000

B.)$ 174,400

C.)$ 292,108

I've asked this before, but the answer someone else got wasn't one of the options.

- precal -
**Ms. Sue**, Saturday, September 11, 2010 at 4:56pm
What is your question?

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**Anonymous**, Saturday, September 11, 2010 at 4:57pm
How much will the Paytons pay to satisfy their mortgage loan, if they make all the payments on time for the amount being financed?

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**drwls**, Saturday, September 11, 2010 at 4:58pm
You have not asked a question. What are the choices supposed to represent?

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**Anonymous**, Saturday, September 11, 2010 at 5:00pm
^^ previous post. SORRY.

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**drwls**, Saturday, September 11, 2010 at 5:09pm
They start the mortgage owing $160,000. For a ball park estimate, they will have an average balance of about 100,000 for 15 years, and will have to pay about 135,000 in interest, plus the principle. That would make a total of 295,000. (c) is the closest to that. There are formulas you could use fr the exact value, but since this is multiple choice, a quick estimate makes more sense.

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**Henry**, Saturday, September 11, 2010 at 10:27pm
That was a very close estimate!

Using the formula, I calculated:

Pt = 292108.80,

Monthly = 1622.83,

Int = 132108.78.

FORMULA:Pt =(Po*r*t) / (1 - (1 + r)^-t

Pt = Pay-back amt.

Po = Loan amt.

r = Monthly int rate expressed as a decimal.

t = Length of loan(15 years).

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