Question

The Williams family is buying a new 3,500-square-foot house in Muncie, Indiana, and will borrow $224,600 from Bank One at a rate of 5.100 percent for 15 years. What will be their monthly loan payment? (Round factor values to 4 decimal places, eg. 1.5212 and final answer to 2 decimal places, eg. 15.25.) Excel Template (Note: This template includes the problem statement as it appears in your textbook. The problem assigned to you here may have different values. When using this template, copy the problem statement from this screen for easy reference to the values you've been given here, and be sure to update any values that may have been pre-entered in the template based on the textbook version of the problem.)

Answer 1

To calculate the Williams family's monthly loan payment, we can use the standard formula for monthly payments with the given principal, the annual interest rate converted to a monthly rate, and the total number of monthly payments projected over 15 years.

Step-by-step explanation:

The Williams family is looking to calculate their monthly loan payment for a new house with a loan amount of $224,600, an interest rate of 5.100 percent, over a period of 15 years. We can find monthly payment using the formula:

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

where PMT is the monthly payment, P is the principal amount ($224,600), i is the monthly interest rate (5.100 percent annually, so divided by 12 months), and n is the total number of payments (15 years * 12 months).

First, we calculate the monthly interest rate: 5.100% / 12 = 0.425%. Converting the percentage to a decimal for calculation gives us 0.00425. Next, we calculate the total number of payments: 15 * 12 = 180. Plugging these numbers into our formula, we will calculate the Williams family's monthly payment:

PMT = 224,600 * (0.00425 / (1 - (1 + 0.00425)^-180)

It is important to note that the actual calculation should be done using a financial calculator or pertinent software to get the precise monthly payment and then rounding the final answer to two decimal places.