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Lucy borrowed $73,250 to purchase a home. The bank offered her an APR of 3.15% for a term length of 20 years. Excel calculates the monthly payment to be $411.77. If she were to pay only the minimum payment for the lifetime of the loan, how much will Lucy be paying in interest?

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abidemiokin

Amount Lucy will be paying in interest will be $38,596.2  

Using the compound amount formula to get the amount after she will pay back after 20 years expressed as:

[tex]A =P(1+\frac{r}{n} )^{nt}[/tex]

  • A is the amount after 20 years
  • r is the rate = 3.15% = 0.0315
  • time in years = 20 years
  • n is the compounding time = 12 (monthly)
  • P is the amount borrowed =  $73,250

Substitute the parameters into the formula;

[tex]A=73,250(1+\frac{0.0315}{12} )^{20(12)}\\A= $73,250 (1.8761)\\A= \$137,421.49[/tex]

If Excel calculates the monthly payment to be $411.77, the amount paid for 20 years will be $411.77 * 240months = $98,824.8

Amount Lucy will be paying interest will be $137,421- $98,824.8 = $38,596.2  

Learn more on compound interest here: https://brainly.com/question/24924853

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