What is the monthly payment on a 25-year loan of $73,700 if the annual interest rate is 10%?
First figure the interest.
I = PRT
Add that to the principal.
Multiply by 25 * 12.
What do you get?
Divide the interest plus the principal by the number of months.
I am pretty sure that for loans lasting 25 years, compound interest would be used.
i = .10/12 = .008333...
n = 25(12) = 300
payment( 1 - 1.008333^-300)/.0083333) = 73700
I get payment = $ 669.71
Thanks...that's what I got
To calculate the monthly payment on a loan, you can use the formula for the monthly payment of a fixed-rate loan:
M = P * (r * (1 + r)^n) / ((1 + r)^n - 1)
Where:
M = Monthly payment
P = Principal loan amount
r = Monthly interest rate
n = Total number of monthly payments
To calculate the monthly interest rate, divide the annual interest rate by 12 (months in a year). In this case, the annual interest rate is 10%, so the monthly interest rate would be 10% / 12 = 0.00833.
The total number of monthly payments (n) for a 25-year loan would be 25 years * 12 months/year = 300 months.
Now, let's substitute the values into the formula:
M = $73,700 * (0.00833 * (1 + 0.00833)^300) / ((1 + 0.00833)^300 - 1)
Calculating this will give you the monthly payment on a 25-year loan of $73,700 at an annual interest rate of 10%.