What did I do wrong in this finance question? Janie obtains a 30-year 5/2 ARM at 3% with a 3/7 cap structure in the amount of 164,500. What is the monthly payment during the initial period?

A: 456.94
B: 693.54
C: 780.08
D: 883.07

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

M=164,500[(.0025(1+.0025)^60)/(1+.0025)^60-1] M=164,500[(.0025(1.0025)^60)/(1.0025)^60-1]
M=164,500[(.0025(1.16)/(1.16)-1]
M=164,500[(.0029)/(1.16)-1]
M=164,500[-0.9975]
M=164,088.75

Question

What did I do wrong in this finance question? Janie obtains a 30-year 5/2 ARM at 3% with a 3/7 cap structure in the amount of 164,500. What is the monthly payment during the initial period?

A: 456.94 
B: 693.54 
C: 780.08 
D: 883.07

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

M=164,500[(.0025(1+.0025)^60)/(1+.0025)^60-1] M=164,500[(.0025(1.0025)^60)/(1.0025)^60-1] 
M=164,500[(.0025(1.16)/(1.16)-1] 
M=164,500[(.0029)/(1.16)-1] 
M=164,500[-0.9975] 
M=164,088.75

ganeshie8 · Answer

think a bit,
you took a loan of 164500.
how can u get a monthly payment of 164,088.75 ?

ganeshie8 · Answer

your work looks good, except for a minor mistake :

you should use $\large t = 30$

ganeshie8 · Answer

your loan period is 30 years,
NOT 5 years, okay ?

ganeshie8 · Answer

Here is the correct answer : http://www.wolframalpha.com/input/?i=164500*%280.03%2F12%281%2B0.03%2F12%29%5E%2812*30%29+%29%2F%28%281%2B0.03%2F12%29%5E%2812*30%29-1+%29

anonymous · Answer

Ooooh ok so I made a mistake at the beginning I see.

ganeshie8 · Answer

yes, other than that everything else looks fine ! good work :)

anonymous · Answer

Thanks I really appreciate the help :) i'll be sure to remember what numbers should be there and what shouldnt!

ganeshie8 · Answer

np:) good luck !