Question

A mortgage of $30000 is borrowed over 25 years at 12% interest. This loan is repaid by regular instalments at the end of every month. How much should each instalment be?

Answer 1

Monthly payment

=P*(i*(1+i)^n)/((1+i)^n-1)

=30000*(0.01*(1+0.01)^300)/((1+0.01)^300-1)

=315.97

HOPE THIS HELPS!!

Answer 2

This requires the mortgage formula for the monthly payment, as follows:

Monthly Payment Amount

=
`P(i(1+i)^n)/((1+i)^n-1)`

where

P=present value (borrowed amount) = 30000

i=interest per period = 0.12/12 = 0.01 per month

n=number of periods (months) = 25*12 = 300 months

Evaluating,

Monthly payment

=P*(i*(1+i)^n)/((1+i)^n-1)

=30000*(0.01*(1+0.01)^300)/((1+0.01)^300-1)

=315.97