Question

Teresa is considering purchasing a home for $220,000 by taking out a loan with an interest rate of 4.3% for 30 years. What would her monthly payment be?

Use the monthly payment formula to calculate the monthly payment for this loan:

M =
M = monthly payment

P = principal

r = interest rate

t = number of years

Answer 1

$1,088.144

Step-by-step explanation:

The applicable formula is as below as derived form annuity concepts.

M = PV × r

1 − (1+r)−n

where p= $220,000

r = 4.3% interest rate per year;

Per month interest rate = 0.043 /12=0.00358

r = 30 year, in months = 30 x 12 =360

Therefore

M= $220,000 x 0.00358

1-(1+0.00358) ^ - 360

M=$220,000 x 0.00358

1 - 0.2762

M = $220,000 x(0.00358 /0.7238

M = $220,000 x 0.00494611

M = $1,088.144