Suppose that if $100,000 is borrowed to purchase a home, then the monthly payment R is a function of the interest rate i (expressed as a percent) and the number of years n before the mortgage is paid, and is given by . Find and interpret your answer. Round your answer to two decimal places.
A) The monthly payment for $100,000 borrowed for 50 years at 2.25% interest is $141.51.
B) The monthly payment for $100,000 borrowed for 50 years at 2.25% interest is $4,265.02.
C) The monthly payment for $100,000 borrowed for 50 years at 2.25% interest is $277.78.
D) The monthly payment for $100,000 borrowed for 50 years at 2.25% interest is $3,801.72.
E) The monthly payment for $100,000 borrowed for 50 years at 2.25% interest is $278.78.

Question

Suppose that if $100,000 is borrowed to purchase a home, then the monthly payment R is a function of the interest rate i (expressed as a percent) and the number of years n before the mortgage is paid, and is given by  . Find  and interpret your answer. Round your answer to two decimal places. ​
A) The monthly payment for $100,000 borrowed for 50 years at 2.25% interest is $141.51. 
B) The monthly payment for $100,000 borrowed for 50 years at 2.25% interest is $4,265.02. 
C) The monthly payment for $100,000 borrowed for 50 years at 2.25% interest is $277.78. 
D) The monthly payment for $100,000 borrowed for 50 years at 2.25% interest is $3,801.72. 
E) The monthly payment for $100,000 borrowed for 50 years at 2.25% interest is $278.78.

Quizplus · Accepted Answer

Plugging in i=2.25 and n=50 into the formula given, we get:

R = (100000*0.0225/12)/(1-((1+0.0225/12)^(-50*12)))

Simplifying this expression, we get R = 277.78 rounded to two decimal places. Therefore, the correct choice is C. The other choices have incorrect monthly payments, indicating an error in calculation or using an incorrect formula.

Suppose That If $100,000 Is Borrowed to Purchase a Home