225k views
2 votes
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
by
7.1k points

1 Answer

4 votes
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
by
7.8k points
Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.

9.4m questions

12.2m answers

Categories