What will be the monthly payment on a $75,000 30-year home mortgage at 1% interest per month?Question 4Select one:a.$771.46b.$775.90c.$1,028.61d.$1,034.53e.None of these is correct
Question
What will be the monthly payment on a 771.46b.1,028.61d.$1,034.53e.None of these is correct
Solution
To calculate the monthly payment on a mortgage, you can use the formula for calculating the payment on an amortizing loan:
P = [r*PV] / [1 - (1 + r)^-n]
where: P = monthly payment r = monthly interest rate (annual rate / 12) PV = loan amount (present value) n = total number of payments (loan term in months)
In this case: r = 1% or 0.01 (monthly interest rate) PV = $75,000 (loan amount) n = 30 years * 12 months/year = 360 months
Substituting these values into the formula:
P = [0.01 * $75,000] / [1 - (1 + 0.01)^-360]
Calculating the above expression will give you the monthly payment.
Let's calculate it:
P = [750] / [1 - (1.01)^-360] P = 750 / [1 - 0.247744] P = 750 / 0.752256 P = $997.63
So, the correct answer is not listed among the options. The correct answer should be approximately $997.63. Therefore, the answer is e. None of these is correct.
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