Problema Solution
Find the monthly payment for the loan. (Round your answer to the nearest cent.)
A $112,000 home bought with a 20% down payment and the balance financed for 30 years at 9.5%
Answer provided by our tutors
A single lump sum payment of $112.000*0.80 = $89.600 today would pay off the loan.
So, $89,600 is the present value of an annuity of 30*12 = 360 monthly payments with interest of 0.095/12 per month.
Thus,
P = $89.600
n = 360
i = 0.095/12
and we must find the monthly payment R in the formula
P = R[((1 - (1 + i)^(-n))/i]
89600 = R [((1 - (1 + 0.095/12)^(-360)/(0.095/12)]
R = $753.41
A monthly payment of $753.41 will be needed.