What will be the monthly payment on a home mortgage of $75,000 at 12% interest compounded monthly, to be amortized over 30 years?

Question

Quizplus · Accepted Answer

First, we need to calculate the monthly interest rate: 
12% annual interest rate / 12 months = 1% monthly interest rate

Next, we need to calculate the total number of payments: 
30 years * 12 months = 360 total payments

Finally, we can use the formula for monthly payment on a mortgage: 
Monthly payment = P [ i(1 + i)^n ] / [ (1 + i)^n – 1] 
where P= $75,000, i = 0.01 (monthly interest rate), and n = 360 (total number of payments)

Plugging in these values, we get: 
Monthly payment = $75,000 [ 0.01(1 + 0.01)^360 ] / [ (1 + 0.01)^360 – 1] 
Monthly payment = $771.46

Therefore, the correct answer is A, $771.46.

What Will Be the Monthly Payment on a Home Mortgage