Question

For an amortized loan, you are given the loan, annual interest rate and length of the loan. find the monthly payment needed

a) Use amortization formula
b) Varies based on loan length
c) Need more data for calculation
d) Fixed monthly payment formula applies

Answer 1

To calculate the monthly payment for an amortized loan, you can use the amortization formula PV = R * (1 - (1 + i)-n)/(i). By substituting the given values into the formula, you can solve for R to find the monthly payment.

Step-by-step explanation:

To calculate the monthly payment for an amortized loan, you can use the amortization formula:

PV = R * (1 - (1 + i)-n)/(i).

Where PV is the principal loan amount, R is the monthly payment, i is the monthly interest rate, and n is the number of monthly payments.

Using this formula, you can calculate the monthly payment for the given loan by substituting the values: PV = $300,000, i = 6% per year or 0.06/12 = 0.005 per month, and n = 30 years or 30*12 = 360 months.

By plugging in these values, you can solve for R to find the monthly payment.