Question

Mr. Coffey bought a house for $195,000. He made a 20% down payment. The interest

rate is 5.25% for 30 years. Use the loan payment calculator to answer the following
questions. (do not use commas or dollar signs in your answer)
What is his monthly payment?

Answer 1

To calculate the monthly payment on a house loan, use the formula: P = (PV * i) / (1 - (1 + i)^(-n)). Substituting the given values, the monthly payment is approximately $917.25.

Step-by-step explanation:

To calculate the monthly payment on a house loan, use the following formula:

P = (PV * i) / (1 - (1 + i)^(-n))

Where:

• P is the monthly payment
• PV is the present value of the loan (purchase price - down payment)
• i is the monthly interest rate (5.25% / 12)
• n is the total number of monthly payments (30 * 12)

Substituting the values into the formula, we get:

P = (195000 - (0.2 * 195000)) * (0.0525 / 12) / (1 - (1 + 0.0525 / 12)^(-30 * 12))

Simplifying the equation, the monthly payment is approximately $917.25.

Answer 2

Answer: $861.44

Step-by-step explanation:

Given the following :

Purchase price = $195,000

down payment = 20%

Interest rate = 5.25%

Period = 30 years

Down payment = 0.2 × $195,000 = $39,000

Therefore, loan amount will be :

$(195,000 - 39,000) = $156,000

The payment per period (monthly payment) can be calculated using the annuity calculator.

Present value = $156,000

Number of periods = 30yrs = 30× 12 = 360 months

Interest = 5.25% / 12= 0.4375% = 0.004375

Future value = 0 (Amount when entire loan has been paid)

Therefore, the payment per period is $861.44 using the financial calculator.