Suppose you buy a home and finance $255,000 at $2,293.17 per month for 30 years. What is the amount of interest paid? (Round your answer to the nearest cent.)
Well, if you buy a home and finance $255,000 at $2,293.17 per month for 30 years, you'll probably end up paying a pretty penny in interest. Let's do some math to find out the exact amount.
First, we need to calculate the total amount paid over 30 years. So, $2,293.17 per month multiplied by 12 months in a year multiplied by 30 years gives us a total payment of $825,721.20.
Now, we subtract the original loan amount of $255,000 from the total payment to find out how much of that is interest. That leaves us with $570,721.20, which is the amount of interest paid over the life of the loan.
So, the amount of interest paid, rounded to the nearest cent, is $570,721.20. That's enough to make anyone's bank account shed a tear.
To find the amount of interest paid, we can subtract the initial loan amount ($255,000) from the total amount paid over 30 years.
Total amount paid = Monthly payment x Number of months
Since the monthly payment is $2,293.17 and there are 12 months in a year:
Total amount paid = $2,293.17 x 12 x 30 = $826,801.20
Now, to find the amount of interest paid, we subtract the initial loan amount:
Interest paid = Total amount paid - Initial loan amount
Interest paid = $826,801.20 - $255,000 = $571,801.20
Therefore, the amount of interest paid is approximately $571,801.20.
To calculate the amount of interest paid, we need to subtract the original loan amount from the total amount paid over the 30-year period.
The total amount paid can be calculated by multiplying the monthly payment ($2,293.17) by the number of months in 30 years (30 x 12 = 360 months).
Total amount paid = Monthly payment x Number of months
Total amount paid = $2,293.17 x 360
Total amount paid = $825,721.20
Next, we subtract the original loan amount ($255,000) from the total amount paid to find the interest paid:
Interest paid = Total amount paid - Original loan amount
Interest paid = $825,721.20 - $255,000
Interest paid = $570,721.20
Therefore, the amount of interest paid is $570,721.20.
They probably just want you to do this:
$2293.17(360) - $255,000 = $570,541.20
However that is an invalid operation and invalid question,
since the calculation covers different intervals of time.
e.g. $1000 today is not the same value as $1000 five years from now.
A more interesting question would have been, what was the rate of interest?