Answer Happy

Problem 9-44 Loan repayment [LO9-4]
Larry Davis borrows $74,000 at 10 percent interest toward the
purchase of a home. His mortgage is for 20 years. Use Appendix
D for an approximate answer, but calculate your final answer
using the formula and financial calculator methods.
a. How much will his annual payments be?
(Although home payments are usually on a monthly basis, we shall do
our analysis on an annual basis for ease of computation. We will
get a reasonably accurate answer.) (Do not round
intermediate calculations. Round your final answer to 2 decimal
places.)
b. How much interest will he pay over the
life of the loan? (Do not round intermediate
calculations. Round your final answer to 2 decimal places.)
c. How much should he be willing to pay to
get out of a 10 percent mortgage and into a 8 percent mortgage with
20 years remaining on the mortgage? Assume current interest rates
are 8 percent. Carefully consider the time value of money.
Disregard taxes. (Do not round intermediate
calculations. Round your final answer to 2 decimal
places.)