Tom wishes to purchase a property that's been valued at $300,000. He has 25% of this amount available as a cash deposit, and require a mortgage for the remaining amount. The bank offered him a 25-year mortgage at 2% interest with monthly payments. Calculate the total interest Tom will pay.

Total interest is $149,528.31

Step-by-step explanation:

In the first place, Tom already has 25%*$300,000=$75,000

This implies that the mortgage amount=$300,000-$75,000=$225,000

In order to ascertain the total interest Tom would pay it would necessary to know the total amount Tom would have to pay back in respect of the mortgage since the total interest is the difference between total amount repayable less the present worth of the mortgage of $225,000

FV=PV * (1+r) ^n

FV is the future worth of the mortgage i. e total amount repayable

PV is the present worth of $225,000

r is the rate of interest of 2% yearly, but 0.17% monthly (2%/12)

n is the number of month it would take Tom to repay the mortgage i. e 25 years multiplied by 12 300 months

FV=$225,000 * (1+0.17%) ^300=$ 374,528.31

Total interest=$ 374,528.31-$225,000=$149,528.31