16
AssignmentMultiple Choice

The Cost of Credit

Question 16 • 2027 Ignite Financial Literacy-Personal Finance - EL3403

The Lagan family bought a $150,000 home in 2002. They obtained a mortgage loan for 30 years. The monthly payments, not including property taxes and insurance, are $895.00. Assuming these monthly payments do not change, how much interest will be paid on the house during the 30 years?(Monthly Payment)(12 months per year)(30 years)(895)(12)(30) = $322,200 total amount paid (principal and interest)

Answer
A
$322,200 of interest
B
$150,000 of interest
C
$172,200 of interest
D
$472,200 of interest

Explanation

There are 12 monthly payments each year for 30 years, so the total paid is $895 × 12 × 30 = $322,200. That total includes both the $150,000 principal and the interest. Subtracting the principal gives $322,200 − $150,000 = $172,200 in interest, so the correct choice is $172,200 of interest.

AI-written and checked against the verified answer.

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