What would the monthly payment be on a $300,000,20 year mortgage with a 4% APR be?
A)$1,432.25
B)$2,245.83
C)$1,817.94
D)$1,765.48

Question

Quizplus · Accepted Answer

The formula to calculate the monthly payment on a mortgage is:
P = L[c(1 + c)^n]/[(1 + c)^n - 1]
Where P is the monthly payment, L is the loan amount, c is the monthly interest rate (in decimal form), and n is the number of payments (in this case, 20 years = 240 months).
Plugging in the values we get:
P = 300000[(0.04/12)(1+0.04/12)^240]/[(1+0.04/12)^240-1]
P = $1,817.94 (rounded to the nearest cent)
Therefore, the best choice is C.

What Would the Monthly Payment Be on a $300,000,20 Year