Question

Which of these expressions can be used to calculate the monthly payment for

a 30-year loan for $190,000 at 11.4% interest, compounded monthly?
??

Answer 1

$1,867.07 monthly payment

Explanation:

1. Define variables to calculate the monthly payment for loans, using:

A = total loan amount (how much you borrow)

R = annual interest rate (in %)

N = number of payments per year

2. Use this formula to calculate monthly payment (M):

`M = A* (R)/(N)`

3. Substitute variables with values from excercise as below (11.4% = 0.114):

`M = 190000 * (0.114)/(12) = 1867.07`

4. The calculated result is a monthly payment installment in given currency (in this case $)