How much interest will he pay over the life of loan

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Larry Davis borrows $90,000 at 11 percent interest toward the purchase of a home. His mortgage is for 25 years. Use Appendix D for an approximate answer, but calculate your final answer using the formula and financial calculator methods.

a. How much will his annual payments be? (Although home payments are usually on a monthly basis, we shall do our analysis on an annual basis for ease of computation. We will get a reasonably accurate answer.) (Do not round intermediate calculations. Round your final answer to 2 decimal places.)

b. How much interest will he pay over the life of the loan? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)

c. How much should he be willing to pay to get out of a 11 percent mortgage and into a 9 percent mortgage with 25 years remaining on the mortgage? Assume current interest rates are 9 percent. Carefully consider the time value of money. Disregard taxes. (Do not round intermediate calculations. Round your final answer to 2 decimal places.)

Reference no: EM131999417

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