Question

a $104,000 selling price with $24,000 down at 6.5% for 25 years results in a monthly payment of: multiple choice $545.61 $554.71 $546.16 $540.17 none of these

Answer 1

The monthly payments, given the selling price, the down payment, and the rate is, D. $540.17

How to find the monthly payment?

First, find the loan amount:

= Selling price - down payment

= 104, 000 - 24, 000

= $80, 000

The monthly payment is an annuity because it is constant. To find this annuity, find the monthly periodic rate and the number of monthly periods:

Monthly rate :

= 6.5% / 12

= 6.5%/12

The number of periods is:

= 25 x 12

= 300 months

Then put this into an annuity calculator to find the monthly payment to be:

= Loan amount / Annuity factor

= 80, 000 / 148.1

= $540.17

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