Question

Suppose you want to buy a vacant lot for your future home for $24,758. If your bank is willing to loan you the money at a 8% APR over the next 19 years how much would be your monthly payment? (Work out the problem on a separate sheet of paper before entering the answer.) (Round up your answer to two decimal point)

Answer 1

To calculate the monthly payment on a $24,758 loan at 8% APR for 19 years, use the amortization formula and round up to the nearest cent. By substituting the values into the formula, the monthly payment amount can be determined.

Step-by-step explanation:

The subject of this question is Mathematics, specifically related to loans and amortization schedules. To calculate the monthly payment for a loan of $24,758 with an Annual Percentage Rate (APR) of 8% over 19 years (which is 228 months), you can use the formula for the monthly payment on an amortizing loan:

`P = L[c(1 + c)^n] / [(1 + c)^n - 1]`

Where:

• P = monthly payment
• L = loan amount ($24,758)
• c = monthly interest rate (APR divided by 12 months, so 0.08/12)
• n = total number of payments (19 years times 12 months/year)

Plugging in the numbers:

`P = $24,758[0.0066667(1 + 0.0066667)^228] / [(1 + 0.0066667)^228 - 1]`

After calculation, the monthly payment is found, and we round up to the nearest cent as required by the question.