Answer:
Monthly installment = $1,139.21
Explanation:
<em>When a loan is to be paid over a period of time using a series of periodic equal installments, it is called loan amortization. Each equal installment is meant to liquidate the principal and the accrued interest.
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The amount to be financed by way of loan=
= cost of house - down payment
= $150,000 - 15,000 = $135,000
The monthly equal installment is calculated as follows:
Monthly equal installment-= Loan amount/Monthly annuity factor
Monthly annuity factor
=( 1-(1+r)^(-n))/r
Monthly interest rate (r)
= 6%/12= 0.5%
Number of months ( n) in 15 years
= 15* 12 = 180
Annuity factor
= ( 1- (1.005)^(-180)/0.005= 118.504
Monthly installment = 135,000/ 118.504
=1139.21
Monthly installment = $1139.21