SOLUTION: Sylvia buys a small farm (a quarter section of 160 acres) for $225 000.00. She makes a down payment of $25 000.00 and uses a 20-year mortgage to pay the remainder. Because it is

Question 1037868: Sylvia buys a small farm (a quarter section of 160 acres) for $225 000.00. She makes a down payment of $25 000.00 and uses a 20-year mortgage to pay the remainder. Because it is farmland, she opted for a yearly payment instead of monthly payments. Sylvia�s payments are $16 931.89 each year.

a. Calculate how much Sylvia will pay for the farm with yearly payments.

b. How much will Sylvia pay in interest during the 20 years?
Hint: Calculate the difference between her total cost and the initial cost of the farm.

Answer by Theo(13342) (Show Source): You can put this solution on YOUR website!
she bought the farm for 225,000
she made a down payment of 25,000.
the mortgage was therefore 200,000.

she is making yearly payments of 16,931.89

20 of those payments will be equal to 338,637.8

that's the total of what she will pay over 20 years.

since the mortgage was 200,000, her interest payments are 338,637.8 minus 200,000 which is equal to 138,637.8

she will have paid 138,637.8 in interest over the 20 years.

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