Answer:
The monthly payment for 25 years is $56.50 more than the monthly payment for 30 years loan.
Step-by-step explanation:
The formula to be used is :
[tex]\frac{p\times r\times (1+r)^{n} }{(1+r)^{n}-1 }[/tex]
1st scenario:
p = 165000
n = [tex]30\times12=360[/tex]
r = [tex](\frac{9.1}{12})/100[/tex] = 0.00758
Putting the values in the formula we get
[tex]\frac{165000\times0.00758 \times (1.00758)^{360} }{(1.00758)^{360}-1 }[/tex]
= $1339.045
2nd scenario:
p = 165000
n = [tex]25\times12=300[/tex]
r = [tex](\frac{9.1}{12})/100[/tex] = 0.00758
Putting the values in the formula we get
[tex]\frac{165000\times0.00758 \times (1.00758)^{300} }{(1.00758)^{300}-1 }[/tex]
= $1395.540
The difference in the monthly payments are =
[tex]1395.540-1339.045=56.495[/tex] dollars ≈ $56.50
Therefore, the monthly payment for 25 years is $56.50 more than the monthly payment for 30 years loan.
