Answered

Brad decides to purchase a $220,000 house. He wants to finance the entire balance. He has received an APR of 2.7 % for a 25-year mortgage. What Is Brad's monthly
payment? Round your answer to the nearest hundredth.


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Answer :

Answer:   $1009.26

Work Shown

The inputs we work with are

  • r = 0.027 = annual interest rate in decimal form
  • i = monthly interest rate in decimal form
  • i = r/12 = 0.027/12 = 0.00225 exactly
  • L = loan amount = 220,000 dollars
  • n = number of months = 25*12 = 300

Then we can compute the following

P = monthly payment

P = (L*i)/( 1-(1+i)^(-n) )

P = (220000*0.00225)/(1-(1+0.00225)^(-300))

P = 1009.262025502 approximately

P = 1009.26