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2 . Consider the following pair of options for a $ 1 0 0 , 0 0 0 mortgage. Option 1 : 1 5 -

2. Consider the following pair of options for a $100,000 mortgage.
Option 1: 15-year fixed rate at 5%.
Option 2: 30-year fixed rate at 6.5%.
a. What is the monthly payment for Option 1?
b. What is the total payment over the lifetime of the loan for Option 1?
c. What is the monthly payment for Option 2?
d. What is the total payment over the lifetime of the loan for Option 2?
e. Based on the amounts you calculated for #a-d, which Option would you choose? Explain why
you selected that Option.

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