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Monthly payments (loan constant) formula

User Tyrease
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Final answer:

The monthly payments of a loan can be calculated using the loan constant formula: C = PV × i / (1 − (1 + i)¯^(-n)). The formula takes into account the loan amount, interest rate, and number of payments. Solving this equation will give you the monthly payment for the loan.

Step-by-step explanation:

The monthly payments of a loan can be calculated using the loan constant formula, which is:
C = PV × i / (1 − (1 + i)¯^(-n))

Where:
C = Monthly payment
PV = Present value (loan amount)
i = Monthly interest rate
n = Number of payments

For example, if you have a $300,000 loan with a 6% interest rate compounded monthly and payments are made over 30 years, the monthly payment can be calculated as follows:
i = 6% / 12 = 0.005
n = 30 × 12 = 360
C = $300,000 × 0.005 / (1 − (1 + 0.005)¯^(-360))

Solving this equation will give you the monthly payment for the loan.

User Lee Greiner
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