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Question

You borrow $3500 for one year from a friend at an interest rate of 1.5% per month instead of taking a loan from a bank at a rate of 18% per year. Compare how much money you will save or loose on the transaction? John's family is expanding in number, and so he decides to sell his current home and upgrade to a larger home. He estimates that he can sell his current home for $400,000 and can buy a larger home for $475,000. He plans to use the entire $400,000 sale proceeds as a down payment on the new home and will finance the remainder for 10 years at 6% nominal annual interest compounded monthly. What is his estimated monthly mortgage payment? Assume that a piece of property is purchased for $500,000. A 20% down payment is made and the rest is financed through a 30-year mortgage loan with a 5.25 % annual interest rate, compounded monthly. The loan will be repaid in equal monthly payments. Calculate the monthly payments. What is the total interest paid through the life of the loan?