Suppose Calvin Cordozar Broadus, Jr. (also known as Snoop Doggy Dogg) is considering moving his family to Manhattan. His real estate agent managed to locate a penthouse overlooking central park for $2.4 million. He will have $2.1 million from the sale of his current home as a down payment. Snoop would like to finance the remainder of the cost and his banker has presented him with two options: an 8% 30-year fixed-rate mortgage or a 7.5% 20-year fixed-rate mortgage.

a) How much will Snoop have to finance?

b) Which loan is cheaper in the long term? Use Excel to help determine your answer.

c) How much interest is saved by choosing the cheapest mortgage?