Wayne is buying a house for $205,000. He is financing $175,000 and obtained a 30-year, fixed-rate mortgage with a 6.425% interest rate. How much are his monthly payments?
$1,285.64
$936.48
$1,517.23
$1,097.50

Question

Wayne is buying a house for $205,000. He is financing $175,000 and obtained a 30-year, fixed-rate mortgage with a 6.425% interest rate. How much are his monthly payments? 
$1,285.64 
$936.48 
$1,517.23 
$1,097.50

anonymous · Answer

what formula does your book give for the monthly payments?

anonymous · Answer

M=P x i(1+i)^nt / (1+i)^nt -1

anonymous · Answer

so 
P = 175000 (amount financed)
t = 30 (period of loan in years)
n = 12 ( number of payments per year)
i = 6.425/100 = 0.06425 (APR)
$$
M=175000\times\frac{0.06425\times(1+0.06425)^{12\times30}}{(1+0.06425)^{12\times30}-1}
$$

anonymous · Answer

here, I missed to divide the APR by "12"!!!