Problem

A friend of yours has just purchased a house and has taken out a $50,000. 11 percent mortg...

A friend of yours has just purchased a house and has taken out a $50,000. 11 percent mortgage, payable at $476.17 per month. After making the first monthly payment, he received a receipt from the bank stating that only $17.84 of the $476.17 had been applied to reducing the principal amount of the loan. Your friend computes that, at the rate of $17.84 per month, it w ill take over 233 years to pay off the $50,000 mortgage. Do you agree with your friend’s analysis? Explain.

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