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ALGEBRA

Farha Gadhia has applied for a $100,000 mortgage loan
at an annual interest rate of 6%. The loan is for a period of 30 years
and will be paid in equal monthly payments that include interest.
Use the monthly payment formula to find the payment.

User Sharmayne
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1 Answer

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The monthly payment formula for a mortgage loan is:

M = P * (r/12) * (1 + r/12)^n / ((1 + r/12)^n - 1)

where:
M is the monthly payment
P is the principal amount (the amount of the loan)
r is the annual interest rate (as a decimal)
n is the total number of payments (number of years multiplied by 12)

In this case, we have:

P = $100,000
r = 0.06 (6% expressed as a decimal)
n = 30 years * 12 months/year = 360

Substituting these values into the formula, we get:

M = 100000 * (0.06/12) * (1 + 0.06/12)^360 / ((1 + 0.06/12)^360 - 1)

Simplifying this expression, we get:

M = $599.55 (rounded to the nearest cent)

Therefore, Farha's monthly mortgage payment will be $599.55, which includes both principal and interest.
User Sam Ramezanli
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