Question

Find the amount of each payment R for a t= 18 year loan with principal P = $18,000 and interest rate r = 9% compounded monthly. Round your final answer to two decimal places.

Answer 1

The amount of each payment to 2 decimal places = $90406.80

Step-by-step explanation:

t = 18 year

Principal = P = $18,000

r = 9% 0.09

Using compound interest formula:

`FV\text{ = P(1 + }(r)/(n))^(nt)`

n = number of times it was compounded in a year.

since it is monthly, n = 12

`\begin{gathered} FV\text{ =future value} \\ FV\text{ = 18000(1+ }(0.09)/(12))^(12*18) \end{gathered}`
`\begin{gathered} FV=18000(1+0.0075)^(216) \\ FV\text{ = }18000(1.0075)^(216) \\ FV\text{ = 18000}*5.0226 \\ FV\text{ = 90406.8} \end{gathered}`

The amount of each payment to 2 decimal places = $90406.80