Sophie is planning to buy a house. She needs to take out a mortgage for 120000 She is considering two possible options.
Option 1: Repay the mortgage over 20 years, at an annual interest rate of 5%,
compounded annually.
Option 2: Pay $1000 every month, at an annual interest rate of 6%, compounded
annually, until the loan is fully repaid.
Calculate the monthly repayment using option 1.
[2 marks]
Calculate the total amount Sophie would pay, using option 1.
[2 marks]
Calculate the number of months it will take to repay the mortgage using [3 marks]
ption 2
Il