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18 September, 04:58

A borrower takes out an interest-only loan at 6% for $1,000,000 with a 10 year term. What is the monthly payment on this loan? (State your answer as a positive number, rounded to two decimal places.)

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  1. 18 September, 06:04
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    The answer is $500

    Explanation:

    a: 1,000,000 the amount of the loan

    r: 0.06 (6% expressed as 0.06)

    n: 120 (based on monthly payments * 10 years)

    monthly payment = (amount * r) / 12

    monthly payment = ($1,000,000 * 0.06) / 120 = $500
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