Answer:
The correct option is C. $9,93216
Step-by-step explanation:
Consider the provided information.
Lydia bought a home for $140,000. She put 20% down with a mortgage rate of 7.5% for 25 years.
That means now she need to pay only 80%.
140000 × 80 %= $112,000
Therefore she borrowed $112,000.
Mortgage rate of 7.5%=0.075 per year.
Monthly rate of interest = [tex]\frac{0.075}{12} =0.00625[/tex]
Number of number of payments is:12(25) = 300
We can calculate the monthly payment c by using the formula:
[tex]c=\frac{rP(1+r)^N}{(1+r)^N-1}[/tex]
Where, r is the monthly rate of interest. P is the borrowed amount.
N loan's term.
Substitute the respective values in the above formula.
[tex]c=\frac{0.00625\times 112000(1+0.00625)^{300}}{(1+0.00625)^{300}-1}[/tex]
[tex]c=\frac{700(1+0.0625)^{300}}{(1+0.0625)^{300}-1}\approx827.67[/tex]
Hence, the monthly payment is $827.67.
We need to find yearly payment, therefore.
$827.67×12≈$9932.04
Hence, the correct option is C. $9,93216
