Question

You want to buy a house that costs $240,000. You will make a down payment equal to 20 percent of the price of the house and finance the remainder with a loan that has an interest rate of 5.31 percent compounded monthly. If the loan is for 30 years, what are your monthly mortgage payments

Answer 1

Answer:

The correct answer is $1,067.38

Explanation:

According to the scenario, the given data are as follows:

House cost = $240,000

Down payment = 20% × $240,000 = $48,000

Amount of loan (p)  = $240,000 - $48,000 = $192,000

Time period ( compounded monthly)  (t) = 30 years × 12 = 360 months

Rate of interest  = 5.31% = 0.0531

Rate of interest Monthly (r) = 0.0531 ÷ 12 = 0.004425

In this question, we use the PMT formula which is shown in the spreadsheet.  

The formula is shown below:

= PMT(Rate;NPER;-PV;FV;type)

The present value come in negative

So, after solving this, the monthly payment is $1,067.38