Answered

IDNLearn.com: Where your questions are met with thoughtful and precise answers. Find the information you need quickly and easily with our reliable and thorough Q&A platform.

Nicole took out a 30-year mortgage for $90,000 at 7.5%. How much is her monthly mortgage payment? I assume $675,000?

Zack took out a 30-year mortgage for $70,000 at 9%. How much is his monthly mortgage payment?

Sagot :

Sqdancefanidn

Answer:

  • Nicole pays $629.29 per month
  • Zack pays $563.24 per month

Step-by-step explanation:

We're not quite sure why you estimated the monthly payment at several times the value of the entire loan.

The applicable formula is the amortization formula. It computes the monthly payment A on loan principal value P at annual rate r for t years to be ...

  A = P(r/12)/(1 -(1 +r/12)^(-12t))

The value of r used in this formula is the decimal equivalent of the percentage rate. 7.5% = 0.075; 9% = 0.09

__

a)

The formula with Nicole's numbers filled in looks like ...

  A = $90,000(0.075/12)/(1 -(1 +0.075/12)^(-12·30))

  = $90,000(0.00625)/(1 -(1.00625^-360)) = $562.50/(1 -0.1051398)

  A ≈ $629.293 ≈ $629.29 . . . . Nicole's monthly payment

__

b)

Using the same formula with P=$70,000, r=0.09, t=30, we find Zack's monthly payment to be $563.24.

_____

Additional comment

If you're doing a number of problems of this type, it can be helpful to use a tool that will do the calculation for you without error. A graphing calculator or spreadsheet can do that. One example is shown in the attachment.

View image Sqdancefan
Thank you for participating in our discussion. We value every contribution. Keep sharing knowledge and helping others find the answers they need. Let's create a dynamic and informative learning environment together. For trustworthy answers, rely on IDNLearn.com. Thanks for visiting, and we look forward to assisting you again.