The Cooks live in an old plantation house. The upkeep on the house is approximately $1,800.00 per year. The heating and cooling costs approximately $2,500.00 per year. The Cooks then build a new house that costs $185,000. They are able to pay 35 percent down and obtain a loan on the balance at 5.5 percent. They are able to arrange to pay off the principal in equal annual payments over 30 years, and the interest is paid annually on the remaining balance. The heating and cooling will be cut by 78 percent and the upkeep by 92 percent. How does the saving in upkeep, heating, and cooling compare to the interest paid the sixth year?

Question

What will be an ideal response?

Answer 1

saving paid about 2/3 the interest ($1,905.46)