Answer:
B) $90,500
Explanation:
Minimum LTV to avoid PMI is 80% of house cost
Value of home = 300,000
Loan = 80%*300,000 = 240000
Monthly installments = -PMT(N, I/Y, Loan)
Monthly installments = -PMT(4.5%/12,15*12,240000)
Monthly installments = $1,835.98
Total repayment over 180 months $330,477.10
Less: Loan value $240,000
Finance Charges $90,477.10
The total amount of finance charges is $90,500 when Ron wants the minimum LTV (loan to value) to avoid PMI (partial molar volume).
Option B is correct.
Finance charges are the number of fees that are charged for the use of money or for the expansion of the existing credit.
It may be a percentage of borrowing or also may be flat-free, but it is also computed on the basis of a percentage.
Computation of finance charges:
According to the given information,
Minimum LTV to avoid PMI = 80% of house cost.
Home's value = 300,000
Then, the total amount of the loan is:
[tex]\text{Loan} =\text{Minimum LTV Rate} \times \text{Value of Home}\\\text{Loan} =80\% \times \$300,000\\ \text{Loan} = \$240,000[/tex]
Now, the monthly repayment installments are:
[tex]\text{Monthly Installments} = \rm{PMT(\dfrac{N}{12} \times {I}\times{Y} \times Loan)}\\\\\text{Monthly Installments} =\text{PMT}( \dfrac{4.5\%}{12}\times \dfrac{15\%}{12}\times \$240,000)\\\\}\\\text{Monthly Installments} =\$1,835.98[/tex]
Total repayment over 180 months:
[tex]=\text{Monthly Payments} \times 180 {\text{Months}}\\=\$1,835.98 \times 180\\= \$330,477.10[/tex]
Then the finance charges will be:
[tex]\text{Finance Charges} = \text{Total Repayment - Loan Amount}\\\text{Finance Charges} =\$330,477.10 - \$240,000\\\text{Finance Charges} = \$90,477.10[/tex]
Therefore, option B is correct.
Learn more about the finance charge, refer to:
https://brainly.com/question/298229
