Posted by **Andrzej** on Tuesday, December 4, 2012 at 11:01pm.

Suppose a 60,000 martgage is to be amortized at 7.5% interest. Find the total amount of interest that would be paid for each term a) 10 years b) 30 years

- math -
**Reiny**, Tuesday, December 4, 2012 at 11:28pm
I will do a) you can do b) the same way

You don't say, but I will assume there are equal monthly payments

a) i = .075/12 = .00625

n = 12(10) = 120

60,000 = P (1 - 1.00625^-120)/.00625

60000 = P(84.244742...)

P = 712.21

interest paid for the 10-year mortgage

= 712.21(120) - 60000

= 25,465.27

do b) the same way,

hint: there is only one number you have to change.

BTW, I don't like to do the calculation at the end for the interest, since it is not really valid.

We are just doing straight multiplication over a 10 year span without considering that time = money

e.g. The payment of $712.21 made in month 18 is not really the same as the payment of $712.21 made in month 65.

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