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You take out a home loan for $162359. The interest on this loan is fixed at 9.6% compounded

monthly for 30 years.
How much is your required monthly mortgage payment?
Round your final answer to the nearest cent (2 decimal places)
4

1 Answer

4 votes

Answer:

$1377.06

Explanation:

You want the monthly payment on a 30 year loan of $162359 at 9.6% interest.

Amortization

The payment value can be computed by any spreadsheet and most graphing calculators using built-in financial functions. Numerous apps and web sites are available for the same purpose.

The monthly payment is $1377.06 according to the attached calculator output.

Formula

The formula used for the purpose is ...

A = P(r/12)/(1 -(1 +r/12)^(-12·t))

where P is the loan value, r is the annual interest rate, and t is the number of years. For P=162359, r=0.096, and t=30, you have ...

A = 162359(0.096/12)/(1 -(1 +0.096/12)^-360) ≈ 1377.06

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Additional comment

The formula assumes the payment is made at the end of the month. Spreadsheet and calculator functions often need to be told that's when the payment is made.

You take out a home loan for $162359. The interest on this loan is fixed at 9.6% compounded-example-1
User NIlesh Sharma
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