Kandace have been approved for a $250,000, 30 year mortgage with an APR of 4.5%. What is their monthly payment rounded to the nearest dollar?
A = P *r*((1+r)^n)/((1+r)^n-1)
where
A = payment Amount per period
P = initial Principal (loan amount)
r = interest rate per period
n = total number of payments or periods
n = 30*12 = 360
P = 250000
4 = 0.045
A = 250000*0.045 * (1.045^360)/(1.045^360 - 1)
To calculate the monthly payment for a mortgage, you'll need to use a formula called the amortization formula. The formula is:
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1 ]
Where:
M = Monthly payment
P = Loan amount (principal)
i = Monthly interest rate (APR divided by 12)
n = Number of monthly payments (30 years multiplied by 12 months)
Let's plug in the given values and calculate the monthly payment:
Principal (P) = $250,000
APR = 4.5%
Monthly interest rate (i) = 4.5% / 12 = 0.375%
Number of monthly payments (n) = 30 years x 12 months = 360 months
Now we can substitute these values into the formula:
M = $250,000 [ (0.00375)(1 + 0.00375)^360 ] / [ (1 + 0.00375)^360 – 1 ]
By calculating this expression, you will find the monthly payment. Rounding the answer to the nearest dollar will give you the final result.