A Loan Officer States, "Thousands of Dollars Can Be Saved

question 87

Multiple Choice

A loan officer states, "Thousands of dollars can be saved by switching to a 15-year mortgage from a 30-year mortgage." Calculate the difference in payments on a 30-year mortgage at 9% interest versus a 15-year mortgage with 8.5% interest.Both mortgages are for $100,000 and have monthly payments.What is the difference in total dollars that will be paid to the lender under each loan? (Round the monthly payment amounts to 2 decimal places.Both interest rates are compounded monthly.)

• A)$89,211
• B)$98,406
• C)$112,410
• D)$124,300

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Definitions:

Net Cash

The total amount of cash available after all cash inflows and outflows have been accounted for during a specific period.

Financing Activities

Transactions involving obtaining resources from creditors and repaying them, as well as equity transactions with investors.

Net Cash

The amount of cash available after accounting for cash inflows and outflows over a period.

Financing Activities

Transactions related to raising and repaying capital, such as issuing stocks or bonds and paying dividends.