12/7/2020 Written Assignment 6: Mortgage Lab

Written Assignment 6: Mortgage Lab

Due Oct 19 by 11:59pm Points 35 Submitting an external tool

Mortgage Lab Signature Assignment Progress saved Done

Score: 30/30 4/4 answered

Disable equation editor

Question 3 8/8 pts 98-99

Score on last try: 8 of 8 pts. See Details for more.

Next question You can retry this question below

Warning!You can submit answers to make sure they are correct make before proceeding to
the next. It is a good idea to also keep a written account of the given values (e.g. original price
of the house, annual interest rate, etc.) as you will be asked to refer back to these values as
you go. Once you have "submitted" an answer to a question, you can click back and forth
between the parts if you need to, though you may need to click on "Reattempt this question"
at the top of the page. Don't worry, your correct answers will be saved!

Round all of your answers to the nearest cent when appropriate to do so. Some questions
are programmed to allow for slight variations in the answers due to rounding errors, BUT it is
important that you don't round values you are using in formulas. Only round your nal
answers.

Part III: 15 Year Mortgage

In this part of the lab you will examine the values associated with a 15 year mortgage. You
will use the same purchase price, down payment, and loan amount from Question 1.

Start by con rming you have those correct values.

Original purchase price (from Question 1) = $ 272200

Down Payment = $ 27220

Loan Amount = $ 244980

https://slcc.instructure.com/courses/650702/assignments/7920660?module_item_id=12298267 1/4
12/7/2020 Written Assignment 6: Mortgage Lab

Typically, the annual interest rate on a 15 year loan is lower than on a 30 year loan.
Assume that you have found a 15 year loan with an annual interest rate of 3.7 % .
Express the annual interest rate as a decimal.

The annual interest rate expressed as a decimal is .037 .

As you did for the 30 year mortgage in Question 1, compute the monthly payment for the 15
year loan.
Again, use the loan formula to nd the monthly payment, d. The loan formula solved for d is:

r
P0 ( )
k

d =
− Nk
r
(1 − (1 + ) )
k

Hint: what value will you use for N this time?

Monthly Payment = $ 1775.48

Assuming you make the monthly payment each month for 15 years, what will be the total
amount repaid?

Total payments = $ 319586.40

Find the total amount of interest paid over the 15 years. To do so, subtract the amount
originally borrowed from the total payments.

Total interest paid = $ 74606.4

Compare the total interest paid with this 15 year mortgage to the total interest paid with the
30 year mortgage (from Question 1).

How much would you save in interest if you use the 15 year mortgage?

Difference in interest paid = $ 135695.4

Submit Question

https://slcc.instructure.com/courses/650702/assignments/7920660?module_item_id=12298267 2/4