The interest to the bank over the life of the loan is $12568.96 if the Tom and Kathy want to borrow $35,000 in order to build an addition to their home.
What is debt?
It is defined as the amount one party needs to pay to another party as the first party borrowed an amount which will credited by the second party. Debt occurs when one party cannot be able to purchase something under normal circumstances.
We know the formula for the monthly payment:
[tex]\rm p = \dfrac{r\times pv}{1-(1+r)^{-n}}[/tex]
r = 5 3/8% = 5.375 = 0.05375
Period of the loan n = 12×12 = 144
Loan amount = $35,000
After calculating, we will get:
Monthly payment = $330.34
Total payment = 330.34×12×12 = $47568.96
Total pay in interest to the bank over the life of the loan:
= $47568.96 - 35000
= $12568.96
Thus, the interest to the bank over the life of the loan is $12568.96 if the Tom and Kathy want to borrow $35,000 in order to build an addition to their home.
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