Calculate the monthly payment on a $200,000 mortgage if payment is made at the beginning of each month, and the annual interest rate is 5.5 percent for 30 years.
A) $11,000.00
B) $1,135.58
C) $1,300.25
D) $1,100.00

Question

Quizplus · Accepted Answer

To calculate the monthly payment on a mortgage, you can use the formula for a fixed-rate mortgage. The formula is:$$ M = P \frac{r(1+r)^n}{(1+r)^n - 1} $$Where:- $M$ is your total monthly mortgage payment.- $P$ is the principal loan amount ($200,000 in this case).- $r$ is your monthly interest rate. This is your annual interest rate divided by 12. In this case, 5.5% or 0.055 divided by 12 equals approximately 0.0045833.- $n$ is your number of payments (the loan term in years multiplied by 12, in this case, 30 years so 360 payments).Plugging the numbers into the formula gives us:$$ M = 200,000 \frac{0.0045833(1+0.0045833)^{360}}{(1+0.0045833)^{360} - 1} $$$$ M \approx 1,135.58 $$Therefore, the monthly payment is approximately $1,135.58, making option B the correct choice.

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