Solve the problem.
-The Montgomerys borrowed $88,000 at for 30 years to purchase a house. Find the monthly payment and the sum of the principal and interest charges.

Question

Solve the problem. 
-The Montgomerys borrowed $88,000 at  for 30 years to purchase a house. Find the monthly payment and the sum of the principal and interest charges.

Quizplus · Accepted Answer

We can use the formula for monthly mortgage payments:

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

where M is the monthly payment, P is the principal (the amount borrowed), i is the monthly interest rate (11ebb7d6_6e8d_4b91_ad4c_7fab969ad8a7_TB8285_11 divided by 12), and n is the number of payments (30 years x 12 months = 360).

Plugging in the given values, we get:

M = 88000 [ (0.00916667)(1 + 0.00916667)^360 ] / [ (1 + 0.00916667)^360 – 1]

M ≈ $616.00

To find the sum of the principal and interest charges, we can multiply the monthly payment by the total number of payments:

Total cost = M x n
Total cost = $616.00 x 360
Total cost ≈ $221,760.00

Therefore, the best answer choice is C.

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