Question

Joe and Victoria take out a $200,000 loan for a real estate investment. The $200,000 is compounded monthly for 20 years at a 4.5% interest rate.What is the estimated interest on this $200,000 loan?

Answer 1

First we need to find the amount after 20 years

The formula is

A=p (1+r/n)^nt

A future value?

P present value 200000

R interest rate 0.045

n compounded monthly 12

T time 20 years

A=200,000×(1+0.045÷12)^(12×20)

A=491,093.27

Now find the interest

I=A-p

I=491,093.27−200,000

I=291,093.27.....Answer

Hope it helps!