Question

Question 27 1 pts You plan to purchase a $370,000 house using either a 25-year mortgage obtained from your local savings bank with a rate of 8.25 percent, or a 15-year mortgage with a rate of 7.25 percent. You will make a down payment of 20 percent of the purchase price. Calculate the difference in interest paid between the 25-year mortgage and the 15-year mortgage? O $213,770.38 $190,373.34 $404,143.72 None is the correct answer $221,694.01

Answer 1

Cumulative interest over 25 years:-

=CUMIPMT(rate,nper,pv,start,end,0)

=CUMIPMT(8.25%,25,370000*80%,1,25,0)

=412086

Cumulative interest over 15 years:-

=CUMIPMT(7.25%,15,370000*80%,1,15,0)

=199213.85

Difference =212,872

The answer is a)