U.S. and Global Economics: Involving MATH
posted by Mary on .
PLZZZ.. Help I just don't understand how to calculate this
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 longterm, 30year 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.

I= 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. 
thx so much!!!!!

You're welcome.

Ms 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 
ok, thx

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