Question

Baggio just purchased a townhouse for $185000. He had a down payment of $12000 and his loan has a term of 30 years with a fixed APR of 4.92%. What will his monthly payment be?

Answer 1

Answer:

$908.93

Step-by-step explanation:

-The effective loan amount is :

$Loan \ Amount=185000-12000\\\\=173000$

#We calculate the effective monthly interest rate:

$r=(1+r_n)^t-1\\\\=(1+0.0492)^{1/12}-1\\\\=0.004010$

#Now we use the formula below to calculate the monthly payments:

$P=S[\frac{r(1+r)^t}{(1+r)^t-1}]$, Where S is the loan amount and P the monthly payments.

Therefore:

$P=S[\frac{r(1+r)^t}{(1+r)^t-1}]\\\\=173000[\frac{0.004010(1+0.004010)^{360}}{(1+0.0040)^{360}-1}]\\\\=908.93$

Hence, Baggio will make monthly payments of $908.93 each.