Question

Shawnee richards and her husband have decided to purchase a cabin in the county. they have applied for a mortgage loan of 80,000 at 6% for a period of 25 years. they will pay it off in equal monthly payments that include interest.

Answer 1

Using it's formula, it is found that their monthly payments for the mortgage loan will be of $515.45.

What is the monthly payment formula?

It is given by:

$A = P\frac{\frac{r}{12}\left(1 + \frac{r}{12}\right)^n}{\left(1 + \frac{r}{12}\right)^n - 1}$

In which:

• P is the initial amount.

• r is the interest rate.

• n is the number of payments.

In this problem, we have that the parameters are given as follows:

P = 80000, r = 0.06, n = 25 x 12 = 300.

Hence:

r/12 = 0.06/12 = 0.005.

Then, the monthly payment will be of:

$A = P\frac{\frac{r}{12}\left(1 + \frac{r}{12}\right)^n}{\left(1 + \frac{r}{12}\right)^n - 1}$

$A = 80000\frac{0.005(1.005)^{300}}{(1.005)^{300} - 1} = 515.45$

More can be learned about the monthly payments formula at brainly.com/question/22846480

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