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 10.5%
$
Answer provided by our tutors
20% down payment is made: 0.20*112,000 = $22,400
So 112,000 - 22,400 = 89,600 is the present value of annuity of 30*12 = 360 monthly payments with interest of 10.5/12 percents or 0.105/12 = 0.00875 per month.
Thus
P = $89,600
n = 360
i = 0.00875
R = the monthly payment
P = R [( 1 - (1 + i)^(-n))/i]
89600 = R[ (1 - (1 + 0.00875)^(-360))/0.00875]
R =(0.00875*89600)/(1 - (1.00875)^(-360))
R = $819.61 is the monthly payment of the loan.
click here to see the step by step calculation of the equation: