You plan to purchase a $330,000 house using either a 30-year mortgage obtained from your local savings bank with a rate of 8.00 percent, or a 20-year mortgage with a rate of 7.00 percent. You will make a down payment of 20 percent of the purchase price. a. Calculate the amount of interest and, separately, principal paid on each mortgage. What is the difference in interest paid

30 year mortgage

down payment = $330,000 x 20% = $66,000

debt = $330,000 - $66,000  = $264,000

monthly payment = $264,000 / 136.2834 (PV annuity factor, 360 periods, 0.667%) = $1,937.14

total payments = $1,937.14 x 360 = $697,370.40

total interest paid = $697,370.40 - $264,000 = $433,370.40

20 year mortgage

down payment = $330,000 x 20% = $66,000

debt = $330,000 - $66,000  = $264,000

monthly payment = $264,000 / 128.9825 (PV annuity factor, 240 periods, 0.583%) = $2,046.79

total payments = $2,046.79 x 240 = $491,229.60

total interest paid = $491,229.60 - $264,000 = $227,229.60

the 20 year mortgage charges $433,370.40 - $227,229.60 = $206,140.80 less interest

1   all nations face the problem of scarcity because there are limited resources and unlimited wants. nations do not have enough factors of production to produce everything that their population wants. entrepreneurial resources initiate businesses to make new goods and services; labor resources produce goods and services.

2 there are four factors of production: natural resources, labor resources, capital resources, and entrepreneurial resources. natural resources are raw materials from nature that are used to produce goods. trees, water, and grains are natural resources. some natural resources, such as wheat and cattle, are renewable

3 wants

things that you do not need to have in order to survive, but would like to have

needs

things that you must have in order to survive

goods

physical products

services

tasks that a business perform for customers

resources

items that people can use to make or obtain what they need or want

determine

to settle or decide by choice of alternatives or possiblities

4 i really dont know