Question

A $104.000 selling price with $24.000 down at 81/2% for 25 years results in monthly payments of

Answer 1

 The monthly payment would be $289.33

$104,000 - $24,000 = $80,000
$80,000 x %8.5 interest = $6,800
$80,000 + $6,800 = $86,800  (total being paid back)
12 (total of months in a year) x 25 (number of years) = 300
Divide $86,800 by 300 and your monthly payment is $289.33

Answer 2

Pv=104,000−24,000=80,000
Now use the formula of the present value of annuity ordinary
Pv=pmt [(1-(1+r/k)^-kn)/(r/k)]
Solve for pmt
Pmt= ?
Pv=80000
R 8+1/2=8.5%
K monthly 12
N 25 years
Plug in the formula above then solve for pmt

Pmt=80,000÷(((1−(1+0.085÷12)^(
−12×25))÷(0.085÷12)))=644.18