Final answer:
To calculate the monthly payment for a $163,500, 20-year loan at 5 percent interest, you can use the formula for calculating the monthly payment on an amortizing loan.
Step-by-step explanation:
To calculate the monthly payment for a $163,500, 20-year loan at 5 percent interest, we can use the formula for calculating the monthly payment on an amortizing loan. The formula is:
Monthly Payment = (Principal * Monthly Interest Rate) / (1 - (1 + Monthly Interest Rate)^(-Number of Payments))
Substituting the given values into the formula, we have:
- Principal = $163,500
- Monthly Interest Rate = 5% / 12 = 0.00417
- Number of Payments = 20 years * 12 months/year = 240
Plugging these values into the formula, we get:
Monthly Payment = (163500 * 0.00417) / (1 - (1 + 0.00417)^(-240))
Calculating this expression will give you the monthly payment for the loan.