Question

Please Help!!
Below is the formula for calculating monthly payments for a fixed-rate loan.

M equals P times the fraction with a numerator of i times the quantity 1 plus i end quantity to the power of n times t all over the denominator of the quantity 1 plus i end quantity to the power of n times t end power minus 1 end fraction

Part 1: Explain what the following variables represent and how changing each one affects the monthly payment amount: P, i, and t.
Part 2: Explain how changing each variable (P, i, and t) affects the total cost of principal and interest over the life of the loan.

Answer 1

@agent0smith

Answer 2

@dumbcow

Answer 3

@ranga

Answer 4

help anyone?

Answer 5

@radar

Answer 6

@UsArmy3947

Answer 7

@hba

Answer 8

@CalebBeavers

Answer 9

anyone?

Answer 10

ughh dont write out the formula like that, it makes it nearly impossible to interpret

Answer 11

como te puedo ayudar? :)

Answer 12

\[M= P (i (1+ i)^nt / (1+ i)^nt -1)\]

Answer 13

helppp pleasee

Answer 14

ok thats different than formula i usually use, but anyway
P = principal
i = annual int rate
n = compounding periods (monthly is 12)
t = num of years of loan

Answer 15

How does chaning each variable affect the monthly payment amount?

Answer 16

higher P means higher payment
(more you borrow means more you have to pay each month)

higher int rate yields higher payment

the longer the loan, the lower the payment

Answer 17

changing*

Answer 18

ohh

Answer 19

so what about part 2?

Answer 20

total cost = payment*length of loan

total cost increases if P increases

total cost increases if i increases

total cost may increase or decrease if t increases
-this is because longer loan means lower payments but you have to make more of them
-so depending on situation total can go up or down

Answer 21

thank you so much! :)