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math

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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 -

    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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