Question

A new school building was recently built. the entire cost of the project was $18,000,000 the city has put the project on a 30 year loan with an APR of 2.7% there are 17,000 families that will be responsible for making payments towards the loan. determine the total amount that each family should be required to pay each year to cover the cost of the new school building.

Answer 1

We will have the following:

Assumin it is compounded once each year, we will first determine the total to be paid each year overall:

$18000000=P(1+\frac{0.027}{1})^{1\cdot30}\Rightarrow P=\frac{18000000}{(1+0.027)^{30}}$

$\Rightarrow P=8093925.398$

Now, we simply divide by the total number of families and we determine the amount of money each family will pay:

$=P_f=\frac{8093925.398}{17000}\Rightarrow P_f=476.1132587\ldots$

$\Rightarrow P_f=476.1$

So, each famiy will pay approximately $476.11 each year.