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shannon finances $189,000 with a 20/7 balloon mortgage at 6.25%. how much will she pay for principal and interest over the life of the loan?
$261,951.94
$264,100.53
$266,751.42
$497,322.00

ANSWER: Total amount is a)$261,951.94

STEP-BY-STEP EXPLANATION:

Shannon finances  $189000

mortgage 0.0625/12 = 0.005208

Duration  20 × 12 = 240

Duration 7 × 12 = 84

For 20

Shanon finances = principal ( 1- mortgage)^-D  /mortagage

189000 = principal ( 1- 0.005208)^-240  / 0.005208

principal = 1381.45  

For 7

interest = Shanon finances (mortgage)^t - principal((1+mortage)^t -1) / mortgage

interest = 189000 (0.005208)^84 - 1381.45((1+0.005208)^84 -1) / 0.005208

interest = 147291.60

total amount plus interest = 147291.60 + 1381.45  

l  = $261,951.94