compounded monthly for 15 years. What total will you have paid for your mortgage after 15 years?

Question

Your mortgage of $300,000 is at a rate of 3% compounded monthly for 15 years. What total will you have paid for your mortgage after 15 years?

Answer 1

Hello Denise, 


The formula to determine the future value of an investment or loan including interest is as follows: 

A = P (1 + r/n)^nt 

A = the future value of the investment/loan including interest 
P = the initial investment or loan amount 
r = the annual interest rate (placed in decimal form) 
n = the number of times the interest is compounded in the year
t = the number of years the money is invested or borrowed

Please note: You will use the order of operations within the brackets first. So, in the brackets you want to first do the division and then the addition. Likewise, you want to multiply the power which is created by n*t 

With your information given: 

A = 300,000 (1 + .03/12)^12*15

A = 300,000 (1 + .0025)^12*15

A = 300,000 (1.0025)^180

A = 300,000 (1.567431724668009)

A = 470,229.517 (I would round up)

A = 470,229.52   This is the total that will be paid over the life of the loan. 

I hope this helps you and if you need further assistance please feel free to comment below.