You have just purchased a home and borrowed $50,000, 7 percent for 25 years, payable monthly. What is your monthly payment?

Question

Quizplus · Accepted Answer

The monthly payment can be calculated using the formula for a fixed-rate mortgage: M = P[r(1+r)^n]/[(1+r)^n – 1], where P is the loan principal ($50,000), r is the monthly interest rate (7% annual rate divided by 12 months), and n is the total number of payments (25 years times 12 months). Using these values, the monthly payment is approximately $353.

You Have Just Purchased a Home and Borrowed $50,000, 7