Question

Suppose you decide to buy a house for $250,000. Based on your credit score and your budget constraint the bank will give you a home loan that has an annual interest of 3.2% compounded monthly on a 30 year loan what will be your monthly loan payment

Answer 1

250000=X[(1-(1+0.032/12)^(-12*30))/(0.032/12)]
Solve for x
X=1081.17

Answer 2

Considering the data given, and using the formula, it is found that the monthly payment will be of $1,081.22.

What is the monthly payment formula?

It is given by:

$A = P\frac{\frac{r}{12}\left(1 + \frac{r}{12}\right)^n}{\left(1 + \frac{r}{12}\right)^n - 1}$

In which:

• P is the initial amount.

• r is the interest rate.

• n is the number of payments.

In this problem, we have that the parameters are given by:

P = 250000, r = 0.032, n = 30 x 12 = 360.

Then:

r/12 = 0.032/12 = 0.002667.

Hence the monthly payments are given by:

$A = P\frac{\frac{r}{12}\left(1 + \frac{r}{12}\right)^n}{\left(1 + \frac{r}{12}\right)^n - 1}$

$A =250000\frac{0.002667(1 +0.002667 )^360}{(1 +0.002667 )^360 - 1}$

A = $1,081.22.

More can be learned about the monthly payment formula at https://brainly.com/question/26267630

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