Final answer:
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.