document.write( "<A HREF=/cgi-bin/jump-to-question.mpl?question=1200939>Question 1200939</A>: <I><SPAN STYLE=\"word-break: break-all;\"> The Martinezes are planning to refinance their home. The outstanding balance on their original loan is $200,000. Their finance company has offered them two options. (Assume there are no additional finance charges. Round your answers to the nearest cent.)\r<BR>\n" );
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document.write( "Option A: A fixed-rate mortgage at an interest rate of 5.5%/year compounded monthly, payable over a 30-year period in 360 equal monthly installments.\r<BR>\n" );
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document.write( "Option B: A fixed-rate mortgage at an interest rate of 5.25%/year compounded monthly, payable over a 15-year period in 180 equal monthly installments.<BR>\n" );
document.write( "(a) Find the monthly payment required to amortize each of these loans over the life of the loan.\r<BR>\n" );
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document.write( "option A:<BR>\n" );
document.write( "option B:\r<BR>\n" );
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document.write( "(b) How much interest would the Martinezes save if they chose the 15-year mortgage instead of the 30-year mortgage? </SPAN>\n" );
document.write( "</I><HR><TABLE width=100%><TR><TD><B><A HREF=http://www.algebra.com/>Algebra.Com's</A> Answer #835183 by </B><A HREF=/tutors/aboutme.mpl?userid=Solver92311><B>Solver92311(821)</B></A><img src=\"/images/stars/stars-11.gif\" alt=\"\" >&nbsp;<A HREF=/tutors/aboutme.mpl?userid=Solver92311><IMG SRC=http://www.algebra.com/images/aboutme-small.gif BORDER=0 alt=\"About Me\" VALIGN=MIDDLE></A>&nbsp;<IMG SRC=http://www.algebra.com/cgi-bin/show-face.mpl?user=Solver92311><BR>You can <A HREF=\"/cgi-bin/embed-solution.mpl?show=1&solution=835183\">put this solution on YOUR website!</A><BR><SPAN STYLE=\"word-break: break-all;\"> <font face=\"Times New Roman\" size=\"+2\">\r<BR>\n" );
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document.write( "For each of the loans, calculate the interest rate <i>per period</i> by dividing the annual interest rate by the number of payments per year.  Express this number as a decimal.  Call this number <IMG STYLE=\"max-width:80%;\" SRC=\"/cgi-bin/rendertex.cgi?\Large r\">\r<BR>\n" );
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document.write( "<IMG STYLE=\"max-width:80%;\" SRC=\"/cgi-bin/rendertex.cgi?\Large PMT\"> is the monthly payment\r<BR>\n" );
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document.write( "<IMG STYLE=\"max-width:80%;\" SRC=\"/cgi-bin/rendertex.cgi?\Large P\"> is the present value, i.e., the original loan amount.\r<BR>\n" );
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document.write( "<IMG STYLE=\"max-width:80%;\" SRC=\"/cgi-bin/rendertex.cgi?\Large n\"> is the number of payments per year, and <IMG STYLE=\"max-width:80%;\" SRC=\"/cgi-bin/rendertex.cgi?\Large t\"> is the number of years.\r<BR>\n" );
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document.write( "For each of the loans, calculate the following:\r<BR>\n" );
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document.write( "<IMG STYLE=\"max-width:80%;\" SRC=\"/cgi-bin/rendertex.cgi?\LARGE \ \ \ \ \ \ \ \ \ \ PMT\ =\ \frac{Pr}{1\,-\,\(1\,+\,r\)^{-nt}}\">\r<BR>\n" );
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document.write( "Those two calculations will give you the option A and option B answers for part (a).\r<BR>\n" );
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document.write( "Multiply the answer for part (a) Option A by 360, and then subtract 200,000 to find the total interest that will be paid if the mortgage is held to maturity.\r<BR>\n" );
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document.write( "Multiply the answer for part (a) Option B by 180, and then subtract 200,000.\r<BR>\n" );
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document.write( "The difference between those two calculations will be the answer to part (b)\r<BR>\n" );
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document.write( "																<BR>\n" );
document.write( "John<BR>\n" );
document.write( "<IMG STYLE=\"max-width:80%;\" SRC=\"/cgi-bin/rendertex.cgi?\LARGE e^{i\pi}\ +\ 1\ =\ 0\"><BR>\n" );
document.write( "My calculator said it, I believe it, that settles it<BR>\n" );
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document.write( "From <https://www.algebra.com/cgi-bin/upload-illustration.mpl> <BR>\n" );
document.write( "I > Ø<BR>\n" );
document.write( "<IMG STYLE=\"max-width:80%;\" SRC=\"/cgi-bin/rendertex.cgi?\Large \ \\r\"> </SPAN>\n" );
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