You just purchased a vacant lot for your future son-in-law's home for $30,000.You financed that amount over 120 months.What would your monthly payment be if your interest rate was 12% compounded monthly?
A)$430.41
B)$389.21
C)$231.22
D)$189.02

Question

Quizplus · Accepted Answer

Using the formula for monthly loan payments:

P = (A / ((1 - (1 + r)^(-n)) / r))

where:
P = monthly payment
A = loan amount
r = interest rate per month
n = number of months

P = ($30,000 / ((1 - (1 + 0.12/12)^(-120)) / (0.12/12))) = $430.41

Therefore, the monthly payment would be $430.41. Answer choice A is the best option.

You Just Purchased a Vacant Lot for Your Future Son-In-Law's