Question

Brad decides to purchase a $250,00 house. He want to finance the entire balance. He has received an APR of 4.5% for a 30-year mortgage.What is Brad's monthly payment?

Answer 1

Given:

Amount = $25000

Time = 30 - year

APR = 4.5

Find: Monthly payment

Sol:.

Finace charge = total installment payment + down payment

Down payment = 0

$\begin{gathered} APR \\ A=\left(P\left(1+rt\right)\right) \end{gathered}$$\begin{gathered} A=\left(25000\left(1+\frac{4.5}{100}\times30\right?\right? \\ A=25000\left(1+1.35\right) \\ A=25000\times2.35 \\ A=58750 \end{gathered}$

For 30 years the total amount is 58750

So monthly payment is:

$\begin{gathered} Per\text{ year payment}=\frac{58750}{30} \\ =1958.33 \end{gathered}$

The monthly payment is:

$\begin{gathered} =\frac{1958.33}{12} \\ =163.194 \end{gathered}$

Brad's monthly payment is $163.194