Problema Solution
Ken just bought a house. he made a $35,000 down payment and financed the balance with a 20-year home mortgage loan with an annual intrest rate of 5.7% compounded monthly. his monthly mortgage payment is $860. What was the selling price of the house?
Answer provided by our tutors
Let
P = the selling price of the house
P - 35,000 would pay off the loan (since a $35,000 down payment was made)
n = 20*12 = 240 monthly payments
i = 0.057/12 interest per month
R = $860 the monthly payment
P - 35000 = R[(1 - (1 + i)^(-n))/i]
P - 35000 = 860[(1 - (1 + 0.057/12)^(-240))/(0.057/12)]
by calculating we find
P = $157,992.064
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the selling price of the house was $157,992.064.