How much interest will Bob pay over the life of his $110,000 fixed-rate loan if his monthly payment is $695.20 for 30 years?

How much interest will Bob pay over the life of his $110,000 fixed-rate loan if his monthly payment is $695.20 for 30 years?

• A. $20,856
• B. $110,000
• C. $140,272
• D. $250,272

Answer: (C)

To determine how much interest Bob will pay over the life of his loan, we start with the total cost of the loan over the entire duration. Bob’s monthly payment is $695.20, and he will be making these payments for 30 years. First, we calculate the total amount Bob will pay throughout the life of the loan. There are 12 months in a year, so over 30 years, he will make a total of 360 payments (30 years x 12 months/year). Now, we multiply his monthly payment by the total number of payments: $695.20 x 360 = $250,272. This total amount represents the principal plus the interest that he will pay over the life of the loan. Next, to find the total interest paid, we need to subtract the original loan amount (the principal) from the total payments made. The original loan amount is $110,000, so we calculate: Total Interest = Total Payments - Principal Total Interest = $250,272 - $110,000 Total Interest = $140,272. Thus, the amount of interest that Bob will pay over the life of his loan is $140,272. This calculation confirms that option C is

To determine how much interest Bob will pay over the life of his loan, we start with the total cost of the loan over the entire duration. Bob’s monthly payment is $695.20, and he will be making these payments for 30 years.

First, we calculate the total amount Bob will pay throughout the life of the loan. There are 12 months in a year, so over 30 years, he will make a total of 360 payments (30 years x 12 months/year).

Now, we multiply his monthly payment by the total number of payments:

$695.20 x 360 = $250,272.

This total amount represents the principal plus the interest that he will pay over the life of the loan. Next, to find the total interest paid, we need to subtract the original loan amount (the principal) from the total payments made.

The original loan amount is $110,000, so we calculate:

Total Interest = Total Payments - Principal

Total Interest = $250,272 - $110,000

Total Interest = $140,272.

Thus, the amount of interest that Bob will pay over the life of his loan is $140,272. This calculation confirms that option C is