Question

# Jim is taking out a \$135,000 mortgage. His bank offers him an APR of 3.32% He wants to compare monthly payments on a 20- and a 30-year mortgage. Find, to the nearest dollar, the difference in the monthly payments for these two loans.

Solution

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Our goal is to calculate the difference in the monthly payments for the two loans. From the task, we know the following variables:

Loan amount is $P=\135,000$

APR is $r=3.32\%$

First mortgage is $t_1=20$ years

Second mortgage is $t_2=30$ years

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