Explanation:
One real-world equation example is calculating the monthly mortgage payment for a home loan. The equation used to calculate the monthly mortgage payment is:
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1 ]
where:
M = Monthly mortgage payment
P = Principal amount (the total amount of the loan)
i = Monthly interest rate
n = Number of months in the loan term
This equation is essential for anyone who is purchasing a home with a mortgage loan. By using this equation, they can calculate their monthly payments, which will help them determine whether they can afford the loan or not. This calculation is important because it helps individuals and families plan their budgets and make informed decisions about home ownership.