A 30-year mortgage requires payments of $2,850.28 at the end of each month. If interest is 5.39% compounded monthly, a) What was the original loan amount? $ b) What would be the amount of interest charged for the entire loan?

A 30-year mortgage requires payments of $2,850.28 at the end of each month. If interest is 5.39% compounded monthly, a) What was the original loan amount? $ b) What would be the amount of interest charged for the entire loan?

Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)

7th Edition

ISBN:9780357033609

Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Chapter7: Using Consumer Loans

Section: Chapter Questions

Problem 6FPE

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Concept explainers

Cost of Credit

The cost of credit is an extra amount that the borrower has to pay besides the loan amount. These credit charges may vary from loan to loan. The cost of credit includes interest charges, maintenance charges, and arrangement charges. Some of the costs are mandatorily collected by the lender based on the loan amount and tenure of the loan. The cost of credit is also called finance charges of the credit.

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A 30-year mortgage requires payments of $2,850.28 at the end of each month. If interest is 5.39% compounded monthly,

a) What was the original loan amount? $

b) What would be the amount of interest charged for the entire loan?

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