You decide to borrow $200,000 to build a new house. The bank charges an interest rate of 6% compounded monthly. If you pay the loan back over 30 years, what will your monthly payment be [rounded to the nearest dollar]?
$1199.
See http://www.hsh.com/calc-amort-results.html?prin=200000&int=6.0&term=30&strt=Jan&stry=2010&full=No&ppay=0&apay=0&pay1=0&ppno=0
There is a formula for calculating it. You can find it by Googling "mortgage amortization"
To calculate the monthly payment on a loan, you can use the formula for calculating the monthly payment of a fixed-rate mortgage. The formula is:
M = P * (r*(1+r)^n) / ((1+r)^n - 1)
Where:
M = Monthly payment
P = Principal (loan amount)
r = Monthly interest rate (annual interest rate divided by 12)
n = Total number of months
In this case:
Principal (P) = $200,000
Annual interest rate = 6%
Monthly interest rate (r) = 6% / 12 = 0.06 / 12 = 0.005
Total number of months (n) = 30 years * 12 months/year = 360 months
Now, let's plug these values into the formula and calculate the monthly payment:
M = 200,000 * (0.005*(1+0.005)^360) / ((1+0.005)^360 - 1)
Calculating this equation will give you the monthly payment amount.