Question

Calculate the monthly payment for a 15 year fixed loan at \( 4.8 \% \) compounded monthly if you are borrowing \( \$ 340,000.00 \). The loan is amortized. Round your answer to the nearest cent.

Answer 1

To find the monthly payment of a $340,000 loan at a 4.8% interest rate over 15 years, plug the principal, monthly interest rate, and total number of payments into the amortization formula and round to the nearest cent.

Step-by-step explanation:

To calculate the monthly payment for a 15-year fixed loan at 4.8% interest rate compounded monthly for an amount of $340,000, we will use the formula for the monthly payment (PMT) of an amortized loan:

PMT = P * [i(1 + i)^n] / [(1 + i)^n - 1]

Where,

• P = Principal amount ($340,000)
• i = Monthly interest rate (Annual rate / 12 months)
• n = Total number of payments (Years * 12 months)

In this case, the monthly interest rate (i) is 4.8%/12, which is 0.004. The total number of payments over 15 years (n) is 15*12, which is 180.

Substituting the values into the formula, we calculate the monthly payment and round it to the nearest cent.

Answer 2

The monthly payment for a 15-year fixed loan at 4.8% interest compounded monthly on a borrowing amount of $340,000 is $2,635.78, rounded to the nearest cent.

Step-by-step explanation:

To calculate the monthly payment for a 15 year fixed loan at 4.8% interest compounded monthly for borrowing $340,000, you can use the loan amortization formula:
PV = R × { [1 - (1+i)ˉˉn] / i }

Where:

• PV is the present value or the loan amount which is $340,000.
• R is the monthly payment.
• i is the monthly interest rate, which is 0.048/12 since the annual rate is 4.8%.
• n is the total number of payments (15 years × 12 months/year).

Solving for R gives us the monthly payment, which is calculated to be $2,635.78, rounded to the nearest cent.