Question

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

a 30-year loan for $195,000 at 6.6% interest, compounded monthly?
O A.
$195 000 0.0055 (1+0.0055) 360
(1+0.0055)300 +1
OB.
$195 000 0.0055 (1+0.0055) 360
(1+0.0055) 300-1
O C.
$195 000 0.0055(1-0.0055)300
(1-0.0055) 300-1

Answer 1

B

Explanation:

Monthly Payment Formula

`\sf PMT=(Pi(1+i)^n)/((1+i)^n-1)`

where:

• PMT = monthly payment
• P = loan amount
• i = interest rate per month (in decimal form)
• n = term of the loan (in months)

Given:

• P = $195,000
• i = 6.6% = 0.066
• n = 12 × 30 = 360

`\implies \sf PMT=(195000(0.066)(1+0.066)^(360))/((1+0.066)^(360-1))`