Question

Find the monthly house payments necessary to amortize each loan. Then calculate the total payments and the total amount of interest paid. $175,000 at 6.24% for 30 years. Can anyone show how to set up this problem?

Answer 1

Monthly payment= $1,076.37

Explanation:

Giving the following information:

$175,000 at 6.24% for 30 years.

First, we need to calculate the future value of the loan. We need to use the following formula:

FV= PV*(1+i)^n

PV= 175,000

n= 12*30= 360 months

i= 0.0624/12= 0.0052

FV= 175,000*(1.0052^360)

FV= $1,132,220

Total interest= 1,132,220 - 175,000= $957,220

Now, we can calculate the monthly payment:

Monthly payment= (FV*i)/{[(1+i)^n]-1}

Monthly payment= (1,132,220*0.0052) / [(1.0052^360) - 1]

Monthly payment= $1,076.37