Mr. Coffey bought a house for $195,000. He made a 20% down payment. The interest

rate is 5.25% for 30 years. Use the loan payment calculator to answer the following

questions. (do not use commas or dollar signs in your answer)

What is his monthly payment?

Answer: $861.44

Explanation:

Given the following:

Purchase price = $195,000

down payment = 20%

Interest rate = 5.25%

Period = 30 years

Down payment = 0.2 * $195,000 = $39,000

Therefore, loan amount will be:

$ (195,000 - 39,000) = $156,000

The payment per period (monthly payment) can be calculated using the annuity calculator.

Present value = $156,000

Number of periods = 30yrs = 30 * 12 = 360 months

Interest = 5.25% / 12 = 0.4375% = 0.004375

Future value = 0 (Amount when entire loan has been paid)

Therefore, the payment per period is $861.44 using the financial calculator.