Answer:
<u>The correct answer is Monthly payment = [ P * (1 + r/n)ⁿˣ]/nx</u>
Step-by-step explanation:
Let's calculate the monthly payment for this loan, using the compounded interest formula, this way:
Monthly payment = [ P * (1 + r/n)ⁿˣ]/nx
where P, is the amount of the loan without interests, r is the interest rate, n is the number of times the interest is applied per period and x the number of time periods elapsed.
Replacing with the real values, we have:
P = 195,000
r = 6.6% = 0.066 compounded monthly
n = 12 times the interest rate is applied per year
x = 30 years
Monthly payment = [195,000 * (1 + 0.066/12)³⁶⁰]/360
Monthly payment = $1,404,693.55/360
Monthly payment = $ 3,901.92
<u>The correct answer is Monthly payment = [ P * (1 + r/n)ⁿˣ]/nx</u>
