Question

What is the monthly payment on a 20 year mortgage (rounded to the nearest dollar) with end of month payments when the annual interest rate is 8%, and we are borrowing $300,000?

Answer 1

PMT = $30555.68

Step-by-step explanation:

given data

time = 20 year

annual interest rate = 8%

borrowing = $300,000

solution

we first get here Present Value Interest Factor of Annuity that is

Present Value Interest Factor of Annuity =
`(1-(1+r)^(-t))/(r)` ..............1

here r is rate and t is time

Present Value Interest Factor of Annuity =
`(1-(1+0.08)^(-20))/(0.08)`

Present Value Interest Factor of Annuity = 9.81814

so here PMT =
`(borrow\ amount)/(present\ value\ interest\ factor)`

PMT =
`(300000)/(9.81814)`

PMT = $30555.68