Question

6. Monthly Mortgage payments can be found using the formula Below:

M-PG2)(1+1)"

(1+12"-1

M = monthly payment

P = amount borrowed

r=annual interest rate

n = number of monthly payments

The Ranallo family just bought a house. They qualified for an annual interest rate of 5.2% and their monthly payment

was $800 for a 30 year mortgage. Algebraically determine the amount of their loan to buy the house.

Answer 1

Answer: your equation is poorly written/wrong hence I used the equation below

answer : $289156.63

Explanation:

applying the formula to calculate monthly repayment of Mortgage

M = P [ r(1+r)^n / ( ( 1+r )^n ) -1 ) ] ----- ( 1 )

M = Total monthly payment = 800 * 12 * 30 = $ 288,000

P = ?

r = 5.2% / 12 = 0.4%

n = 30 * 12 = 360 months

Back to equation 1

P = M / [ r(1+r)^n / ( ( 1+r )^n ) -1 ) ]

= 288000 / [ 0.004 ( 1.004)^360 / (( 1.004)^360 ) - 1 ) ]

= 288,000 / -0.996 = - $289156.63 ( It has a negative value because It is a loan borrowed )