Question

shelley purchased a home in Myland Heights, MO, for $204,000. Her down payment was 20% of the cash price, and she obtained a mortgage for 20 years at 7%. What's Shelley's monthly payment? A. $2,896.43 B. $1,546.43 C. $2,456.43 D. $1,266.43

Answer 1

shelley purchased a home in Myland Heights, MO, for $204,000. Her down payment was 20% of the cash price, and she obtained a mortgage for 20 years at 7%.

20% of amount is paid on cash

20% of 204,000 is 0.2* 204,000= 40800

Remaining amount of loan to be paid = 204,000 - 40,800=163,200

Now we apply monthly loan payment formula

`MP = ((r)/(n)*PV)/(1-(1+(r)/(n))^(-nt))`

MP is the monthly payment amount

PV is the loan amount

r is the interest rate

n is the number of payments per year

t is the time in years

Interest rate is 7% = 0.07. so r= 0.07

n = 12, t= 20 , PV= 163200

Plug in all the values in the formula

`MP = ((0.07)/(12)*163200)/(1-(1+(0.07)/(12))^(-12*20))`

MP = 1265.28786

So answer is D