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October 25, 2014

October 25, 2014

Posted by **Mary** on Wednesday, November 13, 2013 at 2:02pm.

A landlord wants to acquire an additional apartment building for $250,000. The new building contains eight apartment units, which will each rent for $500 per month. The bank is willing to loan the landlord the money for a long-term, 30-year loan at a 5.5 percent interest rate. Calculate the monthly payment, and explain whether taking this loan for the new building is a smart business decision.

- U.S. and Global Economics: Involving MATH -
**Ms. Sue**, Wednesday, November 13, 2013 at 2:08pmI= PRT

250,000 * 0.05 * 30

I = 375,000

250,000 + 375,000 = 625,000

625,000 / 360 = 1,736.11 monthly payment

Compare the monthly payment with the amount of rent he expects to receive each month.

- U.S. and Global Economics: Involving MATH -
**Mary**, Wednesday, November 13, 2013 at 2:09pmthx so much!!!!!

- U.S. and Global Economics: Involving MATH -
**Ms. Sue**, Wednesday, November 13, 2013 at 2:10pmYou're welcome.

- objection - U.S. and Global Economics: Involving MATH -
**Reiny**, Wednesday, November 13, 2013 at 8:28pmMs Sue used the concept of simple interest.

This is a longterm annuity type question and has to be done with compound interest.

i = .055/12 = .0045833.... , n = 12(30) = 360

let the monthly payment be P

250000 = P( 1 - 1.00458333...^-360)/.00458333..

P = 1419.47

- U.S. and Global Economics: Involving MATH -
**Mary**, Friday, November 15, 2013 at 10:50amok, thx

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