Homework Help: math

Posted by john on Monday, March 26, 2012 at 3:28pm.

15,000 down payment, 20-year mortgage loan with annual 6% interest compounded monthly. The payment is $809. Trying to figure the final selling price. I can do all the steps except for calculating P.

math - Steve, Monday, March 26, 2012 at 3:50pm
M = Pr/[1-1/(1+r)^n]
M = payment
r = monthly rate = 0.005
n = 20*12 = 240

809 = P*.005/(1-1/1.005^240)
P = 809/.005*(1-1/1.005^240)
P = 112920
Add in the 15000 down payment, and the selling price was 127920

However, FYI, this is simple interest, not compound interest. The annual rate is 6%, with monthly payments. At each payment, the .5% monthly interest on the unpaid balance is subtracted first, with the remainder going to reduce the principal.

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