Question

A borrower takes out an interest-only loan at 6% for $1,000,000 with a 10 year term. What is the monthly payment on this loan? (State your answer as a positive number, rounded to two decimal places.)

Answer 1

Answer:

The answer is $500

Explanation:

a: 1,000,000 the amount of the loan

r: 0.06 (6% expressed as 0.06)

n: 120 (based on monthly payments * 10 years)

monthly payment = (amount * r )/ 12

monthly payment = ($1,000,000* 0.06) /120 = $500