You have decided to purchase a
You have decided to purchase a house that has a price of$150,000. You plan on putting 10% down and then financing the rest.Assuming you are able to get a 3% annual interest rate compoundedmonthly, what is your monthly payment?
Answer:
ANSWER: ## THE ASSUMPTION THAT I HAVE MADE IS THATTHE TIME PERIOD IS 1 YEAR OR 12 MONTHS AS TIME IS NOT GIVEN IN THEQUESTION AND SO IF THE TIME PERIOD IS DIFFERENT SAY 5 YEARS (60MONTHS) OR 10 YEARS (120 MONTHS) THEN THE ANSWER WILL CHANGE AS WEWILL HAVE TO CONVERT THE NO OF YEARS INTO MONTHS AND HAVE TO LOOKINTO THE TABLE FOR THAT SPECIFIC PERIOD. ##
Purchase price of house = $150,000
money taken on loan = purchase price of house – 10%of purchase price of house
money taken on loan = $150,000 – 10% * 150,000 =$150,000 – $15,000 = $135,000
i = 3% per annum or 3%/12 per month or0.25%
n = 1 year or 12 months
In order to find the monthly payment we will use thefollowing formula.
monthly payment = money taken onloan(a/p,i,n)
monthly payment =135,000(a/p,0.25%,12)
mp = 135,000 * 0.0847 = $11,434.5
so the monthly payment will be $11,434.5 per monthif the time period is 1 year or 12 months.
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