Question

janissa has just purchased a new home. the house was priced at $125,000, and she chose a 40-year mortgage at 5.2%. what will her total cost be?

Answer 1

Answer:

Total cost is $297148.80.

Step-by-step explanation:

EMI formula is :

$\frac{p\times r\times(1+r)^{n} }{(1+r)^{n} }$

p = 125000

r = $5.2/12/100=0.00433$

t = $40\times12=480$

Putting values in formula to get her monthly payments:

$\frac{125000\times0.00433\times(1+0.00433)^{480} }{(1+0.00433)^{480} }$

$\frac{125000\times0.00433\times(1.00433)^{480} }{(1.00433)^{480} }$

= $619.06

Now, she will pay $619.06 per month for 40 years or 480 months.

So, total amount that will be paid by her is :

$619.06\times480=297148.80$

So, total cost is $297148.80.

Answer 2

Price of the house, C = $125,000
Total number of payments, n = 40*12 = 480 months
Monthly rate, i = 5.2%/12 = 0.052/12

Monthly payment, P = C[i(1+i)^n]/[(1+i)^n-1]

Substituting;
P = 125,000[0.052/12(1+0.052/12)^480]/[(1+0.052/12)^480-1] = $619.40

Total cost = monthly payment*total number of payments = 619.40*480 = $297,312