Question

The monthly payment is $__.

(Do not round until the final answer. Then round to the nearest cent as needed.)
The total interest for the loan is $__.
(Use the answer from part (a) to find this answer. Round to the nearest cent as needed.)

Answer 1

The question pertains to calculating monthly payments and total interest for a loan, which involves using the present value formula that factors in the loan amount, interest rate, and loan term. An example calculation is provided assuming a $300,000 loan at a 6% interest rate over a 30-year period.

Step-by-step explanation:

Loan Payment and Total Interest Calculation

Calculating the monthly payment for a loan involves using the loan's principal amount, interest rate, and the loan term. Once the monthly payment is determined, you can calculate the total interest paid over the life of the loan. Let's assume a $300,000 loan with a 6% interest rate convertible monthly over 30 years.

To calculate monthly payments, we use the formula:

PV = R [(1 - (1+i)^-n) / i]

Where:

PV is the loan principal ($300,000)

R is the monthly payment

i is the monthly interest rate (6% annual rate divided by 12 months)

n is the total number of payments (30 years x 12 months)

After calculating the monthly payment R, you can find the total payment over 30 years and subtract the principal to get the total interest paid.