Calculate the amount of interest paid for each option and how much does the buyer save with the 20 year option in the following case: The price of small cabin is 50000. The banks require 5% down...

Calculate the amount of interest paid for each option and how much does the buyer save with the 20 year option in the following case:

The price of small cabin is 50000. The banks require 5% down payment and the buyer is offered two mortgage options: 20 years fixed at 9.5% or 30 years fixed at 9.5%.

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The formula for the monthly payment to be made for a mortgage is given by `M = (P*r*(1 + r)^N)/((1+r)^N - 1)` where r is the monthly rate of interest, N is the tenure in terms of number of months and P is the principle amount. The total interest paid is M*N - P.

It is...

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