Ethan is looking to take out a mortgage for $620,000 from a bank offering an annual interest rate of 4.5%, compounded monthly. U

Question

1 year ago

11

sing the formula below, determine his monthly payment, to the nearest dollar, if the loan is taken over 25 years.

1 answer:

Komok [63] · Answer 1 · 2023-09-12T01:33:03+03:00

His monthly payment to the nearest dollar of the loan taken over 25 years = $4,391.67

<h3>Calculation of monthly payment</h3>

The mortgage capital = $620,000

The rate of payment of interest= 4.5%

The period for the payment = 25 years.

Simple interest

= p×T×R/100

= $620,000 × 25 × 4.5/100

= 69750000/100

= $697,500

Therefore the total amount of money that will be generated = $620,000 + $697,500 = $1,317,500

Therefore the monthly payment,

= $1,317,500/12×25

= $4,391.67

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