Question

You have a mortgage of $110,000 with a term of 30 years at an APR of 9%. Compute your monthly payment.

Answer 1

you have the formula for this?

Answer 2

Yeah, I have all the formulas I just don't know which one to use

Answer 3

oh, i can help you understand which to use. Post them all up for me please.

Answer 4

I don't remember them it's been a while.

Answer 5

\[A= P( 1+ \frac{ R }{ M } ) ^{Mt}\]

Answer 6

I think that's the one we want.

Answer 7

What' A stand for? i know P is principal, R is rate, m is months and t is time in years

Answer 8

m depends if it's quarterly monthly continously etc.

Answer 9

I think so too. So far I have \[A=110,000 \left( 1+\frac{ .09 }{ ? } \right) \]

Answer 10

I don't know what to insert under .09

Answer 11

so since your doing in monthly M=12. because it's 12 months in a year

Answer 12

and that's the amount of times that the rate will be applied

Answer 13

Ahhhhh okay

Answer 14

m isn't always months. if it said what's your quarterly payment then you would use 4

Answer 15

because you would apply the rate 4 times in a year.

Answer 16

make sense?

Answer 17

So let me type out the equation fully

Answer 18

\[A=110,000 \left( 1+\frac{ 0.9 }{ 12 } \right)^{12(30)}\]

Answer 19

is that correct?

Answer 20

well done. alright so just to make sure you understand it

Answer 21

what if it said what is your semi-annual payment?

Answer 22

what would M be there?

Answer 23

2

Answer 24

that's right you got it.

Answer 25

if it says continously you have to use the other equation

Answer 26

I have an example like that in my notes, haha. Thank you very much!!

Answer 27

\[P=e ^{rt}\]

Answer 28

that's the one if it says "compounded continuously" or something like that

Answer 29

Yw

Answer 30

Got it!

Answer 31

@ikileyxx wait what did you get for your final answer?

Answer 32

@ikileyxx i think we used the wrong formula

Answer 33

oh gosh haha uh, $125,558 and monthly payment of $349

Answer 34

\[monthly payment=\frac{ P(\frac{ r }{ M } )}{ 1-(1+\frac{ r }{ M })^{-Mt} }\]

Answer 35

wait how'd you get 349?