The monthly payment on a home purchased for $120,000 with 20% down at 8% for 25 years is $741.12.

Question

Quizplus · Accepted Answer

To calculate the monthly payment on a mortgage, we can use the formula:

M = P [ i(1 + i)^n / ((1 + i)^n – 1) ]

Where:
M = monthly payment
P = principal (amount borrowed)
i = monthly interest rate (annual rate divided by 12)
n = total number of payments (number of years multiplied by 12)

Using the given information, we can calculate:

P = $120,000 - 20% down payment = $96,000
i = 8% / 12 = 0.00667 (monthly interest rate)
n = 25 years x 12 = 300 (total number of payments)

M = $96,000 [ 0.00667(1 + 0.00667)^300 / ((1 + 0.00667)^300 - 1) ]
M = $741.12

Therefore, the statement "The monthly payment on a home purchased for $120,000 with 20% down at 8% for 25 years is $741.12" is true.

The Monthly Payment on a Home Purchased for $120,000 with 20