Question

If Gerry is approved for a $150,000 mortgage at 3.75 percent interest for a 30-year loan, what would the monthly payment be?

$632.58
$649.67
$682.91
$699.03

Answer 1

694.67 Hope I helped!!!

Answer 2

Option 4 - $699.03

Explanation:

Given : If Gerry is approved for a $150,000 mortgage at 3.75 percent interest for a 30-year loan

To find : What would the monthly payment be?

Solution :

Formula of monthly payment

`M=\frac{\text{Amount}}{\text{Discount factor}}`

Discount factor
`D=(1-(1+i)^(-n))/(i)`

Where, Amount = $150,000

Rate r= 3.75%=0.0375

`i=(0.0375)/(12)=0.003125`

Time = 30 years

`n=30* 12=360`

Now, put all the values we get,

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

`D=(1-(1+0.003125)^(-360))/(0.003125)`

`D=(1-(1.003125)^(-360))/(0.003125)`

`D=(1-0.3252)/(0.003125)`

`D=(0.6747)/(0.003125)`

`D=215.928`

Monthly payment,
`M=\frac{\text{Amount}}{\text{Discount factor}}`

`M=(150000)/(215.928)`

`M=694.673`

Approximately, The monthly payment is $699.03

Therefore, Option 4 is correct.