A home mortgage loan for $80,000 is available from the neighboring bank at an interest rate of one percent per month. The loan will mature in 25 years. Approximately what payment must the borrower make each month under the terms of this loan agreement?

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The monthly payment for a loan can be calculated using the formula for an amortizing loan: M = P[r(1+r)^n] / [(1+r)^n – 1], where P is the principal ($80,000), r is the monthly interest rate (0.01), and n is the total number of payments (300). Plugging in these values gives a monthly payment of approximately $843.

A Home Mortgage Loan for $80,000 Is Available from the Neighboring