Question

heidi took out a 30 year loan for $90000 at 8.3% interest, compounded monthly. What is her monthly payment?

Answer 1

$679.31- APEX

Answer 2

$679.31

Explanation:

The formula for the monthly payment (P) on a loan of A dollars that is paid back in equal monthly payments over n months, at an annual interest rate of i % is

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

We must express the interest rate on a monthly basis.

i = 8.3 %/yr = 0.6917 %/mo = 0.006 917

A = $90 000

n = 360 mo

`P = 90 000((0.006 917)/(1-(1+0.006 917)^(-360)))`

`P = (622.5)/(1-1.006 917^(-360))`

`P = (622.5)/(1 - 0.083 62)`

`P = (622.5)/(0.9164)`

P = $679.31

Heidi’s monthly payment is $679.31.