Bill's projected monthly payment under the Monthly Payments for Long-Term Loans using the Rule of Thumb is $870.00.
Bill's exact monthly payment using the Monthly Payments calculation is $933.36.
The real monthly payment is approximately $63.36 more than the predicted cost.
<h3>
How does the Rule of Thumb for Monthly Payments on Long-Term Loans work?</h3>
Simple procedures may be used to calculate the Monthly Payments for Long-Term Loans Rule of Thumb.
To begin, divide the annual percentage rate (APR) by 12 to obtain the monthly percentage rate (MPR).
Second, calculate the MPR on the principal amount. The product is the estimated monthly payment, which is similar to the real monthly payment and was computed using a financial calculator below.
Estimated Monthly Payment:
Home Mortgage = $116,000
Term of loan = 30 years
APR = 9%
Monthly interest rate = 0.0075 (0.09/12)
Estimated monthly payment based on the Monthly Payments for Long-Term Loans Rule of Thumb
($116,000 x 0.0075) = $870
Actual Monthly Payment Formula:
N (# of periods) = 360 months (30 x 12)
I/Y (Interest per year) = 9%
PV (Present Value) = $116,000
FV (Future Value) = $0
The outcome is given as:
PMT = $-933.36
Sum of all periodic payments = $-336,010.40
Total Interest = $220,010.40
Actual monthly payment = $933.36
Estimated monthly payment 870.00
Difference = $63.36
Learn more about Mortage Payments:
brainly.com/question/1318711
#SPJ1