Alice purchased a house using a fixed rate mortgage. The annual interest rate is 5.6% compounded monthly for 30 years. The mortgage amount is $205,000. what is the monthly payment on the mortgage?

(1) Answers

Hi there The formula of the present value of annuity ordinary is Pv=pmt [(1-(1+r/k)^(-kn))÷(r/k)] So we need to find the monthly payment pmt Pmt=pv÷[(1-(1+r/k)^(-kn))÷(r/k)] Pv present value 205000 R interest rate 0.056 K compounded monthly 12 N time 30 PMT=205,000÷((1−(1+0.056÷12)^( −12×30))÷(0.056÷12)) =1,176.86...answer Hope it helps

Add answer