Question

Determine the monthly principal and interest payment for a 20-year mortgage when the amount financed is $285,000 and the annualpercentage rate (APR) is 5.5%.The monthly principal and interest payment is $____

Answer 1

`$\$1,960.4779$`

Explanations:

From the given table, we can see that the monthly principal and interest payment per $1000 is given at various rates and a different number of years.

First, we need to get the monthly principal and interest payment per $1000 for a 20-year mortgage and an annual percentage rate (APR) of 5.5%.

• From the table, the price amounts to, $6.87887, (simply check 5.5% APR under 20years).

$1000 financed yields $6.87887. This can be expressed as;

• $1000 = $6.87887.................................... 1

Based on the given question, we need to get the monthly principal for the amount of $285,000. This can be expressed as:

• $285,000 = x .............................................. 2

Divide equations 1 and 2 to find the value of "x"

`(1000)/(285000)=(6.87887)/(x)`

Cross multiply:

`\begin{gathered} 1000x=285,000*6.87887 \\ x=\frac{285\cancel{000}*6.87887}{1\cancel{000}} \\ x=285*6.87887 \\ x=\$1,960.4779 \end{gathered}`

Therefore the monthly principal and interest payment is approximately $1,960.4779