How much would the monthly payment be on a mortgage of $250,000 for 30 years at a rate of 6.0%?
A)$1,498.87
B)$1,779.48
C)$743.66
D)$721.73
E)$1,450.03

Question

Quizplus · Accepted Answer

We can use the formula for calculating mortgage payments:

M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
where M is the monthly payment, P is the principal ($250,000 in this case), i is the monthly interest rate (6.0% divided by 12), and n is the number of payments (30 years times 12 months per year, or 360 payments).

i = 6.0% / 12 = 0.005
n = 30 x 12 = 360

M = 250,000 [ 0.005(1 + 0.005)^360 ] / [ (1 + 0.005)^360 - 1 ]
M = $1,498.87

Therefore, the monthly payment on a mortgage of $250,000 for 30 years at a rate of 6.0% would be $1,498.87 per month. The correct answer is A.

How Much Would the Monthly Payment Be on a Mortgage