Question

Which of these expressions can be used to calculate the monthly payment for a 25-year loan for $150,000 at 13.8% interest, compounded monthly?

Answer 1

To calculate the monthly payment for a 25-year loan for $150,000 at 13.8% interest, compounded monthly, you can use the formula for a mortgage payment. Plugging in the given values, the monthly payment would be approximately $2,025.49.

Step-by-step explanation:

To calculate the monthly payment for a 25-year loan for $150,000 at 13.8% interest, compounded monthly, you can use the formula for a mortgage payment:

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

Where:

1. P is the monthly payment
2. Pv is the present value (loan amount)
3. i is the monthly interest rate (annual interest rate divided by 12)
4. n is the total number of payments (loan term in years multiplied by 12)

Using the given values, we can substitute them into the formula:

P = (150,000 * (0.138/12)) / (1 - (1+(0.138/12))^(-25*12))

By simplifying the calculation, we get:

P ≈ $2,025.49

Therefore, the monthly payment for the loan would be approximately $2,025.49.