Question

A new school building was recently built in the area. The entire cost of the project was $16,000,000$⁢16,000,000. The city has put the project on a 2020-year loan with an APR of 3.3%3.3%. There are 17,00017,000 families that will be responsible for making monthly payments towards the loan. Determine the total amount that each family should be required to pay each year to cover the cost of the new school building. Round your answer to the nearest cent, if necessary.

$

Answer 1

$70.38

Step-by-step explanation:

1. Calculate the total interest paid over the loan term:

Loan amount = $16,000,000

APR (Annual Percentage Rate) = 3.3%

Loan term = 20 years

To calculate the total interest paid, we can use the formula for compound interest:

Total interest = Loan amount * (1 + APR)^Loan term - Loan amount

Total interest = $16,000,000 * (1 + 0.033)^20 - $16,000,000

2. Calculate the annual payment required to cover the loan cost:

Total loan cost = Loan amount + Total interest

Annual payment = Total loan cost / Loan term

3. Calculate the payment per family:

Payment per family = Annual payment / Number of families