Calculate the final amount of a 30-year mortgage loan of $120,000 with a compound interest rate of 4.25% compounded semiannually
To calculate the final amount of a mortgage loan, we can use the formula for compound interest:
A = P (1 + r/n)^(nt)
Where:
A = final amount
P = principal (initial loan amount)
r = interest rate (as a decimal)
n = number of times interest is compounded per year
t = number of years
In this case, the principal (P) is $120,000, the interest rate (r) is 4.25% or 0.0425, the number of times interest is compounded (n) is 2 (semiannually), and the number of years (t) is 30.
Plugging in these values into the formula, we have:
A = $120,000 (1 + 0.0425/2)^(2*30)
A = $120,000 (1 + 0.02125)^(60)
A = $120,000 (1.02125)^(60)
Calculating this using a calculator or spreadsheet, the final amount of the mortgage loan after 30 years would be approximately $405,474.32.