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3 June, 21:07

g Judy recently purchased her first home for $220,000. She made a down payment of $20,000, and financed the balance over 15 years, at 9% interest. If Judy's first payment is due on October 1 of this year, approximately how much interest will she pay in this year

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  1. 3 June, 21:25
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    interest paid this year = $1,320

    Explanation:

    First of all, let us calculate the dollar value of the interest on the loan.

    interest rate in percentage = 9% of $220,000

    ∴ interest in dollars = 9/100 * 220,000

    = 0.09 * 220,000 = $19,800

    Next, we are told that the loan was financed over 15 years. Assuming that Judy paid the interest equally over the 15 years, we will simply divide the total interest by 15, to get the interest for each year (including this year):

    interest this year = 19,800 : 15 = $1,320

    Therefore interest paid this year = $1,320
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