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9 July, 17:11

Joe Chin bought a house for $180,000. He made a 20% down payment. Joe secured a loan for the balance of the purchase price at 6.5% interest for 30 years. What will be the monthly payments on the loan? (do not use commas or dollar signs in your answer)

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  1. 9 July, 20:04
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    910.18

    Explanation:

    After Chin's down payment the amount borrowed is ...

    (1 - 20%) ($180,000) = 0.80·$180,000 = $144,000

    The amount of the payment is given by the amortization formula ...

    A = P (r/n) / (1 - (1 + r/n) ^ (-nt))

    for P borrowed at rate r for t years, compounded n times per year.

    A = 144000 (0.065/12) / (1 - (1 +.065/12) ^ (-12·30)) = 910.18

    The monthly loan payments will be 910.18.
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