Question

Investor C decided to purchase a home that costs $600,000 with a 40% down payment loan, a 3.00% annually fixed rate for a 30-year term, and one payment per month. What is the monthly payment for this mortgage? Round to the nearest cent. a) $1,438.89 b) $1,721.67 c) $2,000.00 d) $2,500.00

Answer 1

The monthly payment for this mortgage is approximately $1,721.67.

Step-by-step explanation:

To calculate the monthly payment for a mortgage, we can use the formula for calculating the monthly payment of a loan:

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

Where:

• P is the principal amount, which is the loan amount minus the down payment ($600,000 * 0.6 = $360,000)
• i is the monthly interest rate (3.00% / 100 / 12 = 0.0025)
• n is the number of payments, which is the total number of years multiplied by 12 (30 * 12 = 360)

Plugging in these values, we get:

Monthly payment = 360,000 * 0.0025 * (1+0.0025)^360 / ((1+0.0025)^360 - 1)

Using a calculator or spreadsheet, the monthly payment comes out to be approximately $1,721.67.

Answer 2

The monthly payment for the mortgage is approximately $2,527.35 (rounded to the nearest cent).

Step-by-step explanation:

To calculate the monthly payment for this mortgage, we can use the formula for calculating the monthly payment of a mortgage:

Monthly Payment = (Loan amount * Annual interest rate * (1 + Annual interest rate)Number of payments) / ((1 + Annual interest rate)Number of payments - 1)

Using the given values:

Loan amount = $600,000 (60% of the house cost)

Annual interest rate = 3.00% = 0.03 (converted to decimal form)

Number of payments = 30 years * 12 months/year = 360 months

Plugging these values into the formula:

Monthly Payment = ($600,000 * 0.03 * (1 + 0.03)360) / ((1 + 0.03)360 - 1)

Using a financial calculator or spreadsheet software, the monthly payment for this mortgage is approximately $2,527.35. Therefore, the correct answer is d) $2,500.00 (rounded to the nearest cent).