Scenario: John is looking to buy a house in Bozeman. He has about $120,000 in savings, and the house he is interested in costs $300,000. When he approaches Boze Bank, the same bank at which all of his five brothers have accounts, he learns that he can borrow at a nominal interest rate of 5 percent. Inflation is 2 percent for 2 years after he buys the house and then increases to 3 percent. Assume that Boze Bank is the only bank in Bozeman and John's five brothers contribute a significant amount to the bank's total savings.


Refer to the scenario above. Assume John has to pay a 5 percent sales tax on his house. He uses the remainder of his cash and borrows the remaining amount of money. At the end of each year, he pays $50,000 toward the loan. How much interest will he end up paying in total?

a. $17,593
b. $27,593
c. $28,593
d. $20,593