   Chapter 12, Problem 35AT ### Contemporary Mathematics for Busin...

8th Edition
Robert Brechner + 1 other
ISBN: 9781305585447

#### Solutions

Chapter
Section ### Contemporary Mathematics for Busin...

8th Edition
Robert Brechner + 1 other
ISBN: 9781305585447
Textbook Problem

# Sandpiper Savings & Loan is offering mortgages at 7.32% interest. What monthly payments would be required to amortize a loan of $200,000 for 25 years? To determine To calculate: The amount of loan payment to be made at the end of every month to Sandpiper Savings and loan at 7.32% interest compounded monthly for the loan of$200,000 in 25 years.

Explanation

Given Information:

Payment frequency is 1 month, time duration is 25 years, nominal rate of return is 7.32% and interest is compounded monthly and present value amount is $200,000. Formula used: The formula to compute the amortization payment is, Amortization payment=PV×i1(1+i)n Where, PV is the present value, i is the interest rate per period, n is the number of periods. Calculation: Consider that Payment frequency is 1 month, time duration is 25 years, nominal rate of return is 7.32% and interest is compounded monthly and present value amount is$200,000.

The rate period is 0.61% or 0.0061(7.32%÷12 period per year).

The number of periods is 300(25 years×12 period per year)

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