Question

Shari buys a house for $240,000. She makes a down payment of 20% and finances the rest with a 15 year mortgage. She agrees to make equal payments at the end of each month. If the annual interest rate is 1.2% and interest is compounded monthly, what is Shari's regular payment? To solve this question, we use the formula P equals R open parentheses fraction numerator 1 minus (1 plus i )to the power of negative n end exponent over denominator i end fraction close parentheses. Fill in the following blanks for the given information:

Answer 1

Answer:

$1166.08 is the monthly payment for the mortgage per month.

Step-by-step explanation:

The meaning of this stated formula on the statement is the present annuity formula because we will have future monthly payments on the mortgage of the house in which they pay off the present value of the house which is $240000 x 80% = $ 192000 as this amount will excludes the down payment of 20% that is made.

We are given Pv the present value which excludes the down payment  $192000.

We have the interest rate i which is 1.2%/12 as it is compounded monthly.

n is the number of payments made over a period which is 12 x 15 years= 180 payments as it is compounded monthly.

no we substitute the above mentioned information to the present value annuity formula stated to calculate R the monthly payment:

Pv = R[(1-(1+i)^-n)/i]

$192000 = R[(1-(1+(1.2%/12))^-180)/ (1.2%/12)] divide both sides by the coefficient of R

$192000/[(1-(1+(1.2%/12))^-180)/(1.2%/12)] = R

$1166.08 =R which this is the amount that will be paid for the mortgage every month for 15 years.