Rob and Laura wish to buy a new home. The price is $187, 500 and they plan to put 20% down. New Rochelle Savings and Loan will lend them the remainder at a 10% fixed rate for 30 years, with monthly payments to begin in one month. Ignore taxes. How much will their monthly payments be? a. $1, 512.56 b. $1, 325.99 c. $1, 316.36 d. $1, 645.45

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Macy Donovan

Business

14 May, 03:57

Rob and Laura wish to buy a new home. The price is $187, 500 and they plan to put 20% down. New Rochelle Savings and Loan will lend them the remainder at a 10% fixed rate for 30 years, with monthly payments to begin in one month. Ignore taxes. How much will their monthly payments be? a. $1, 512.56 b. $1, 325.99 c. $1, 316.36 d. $1, 645.45

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Frida Riggs · Answer 1

The Answer is C. $1,325.99

Explanation:

The monthly equated formula is used to reach out on monthly installments

total amount needed to buy a new home is = $187500 - ($187500*20%=$150000

Therefore loan required is $150,000 which will be repaid over 30 years i. e 30*12=360 months

Interest=10%/12=.008333

Installment=.00833 * (1+.00833) ^360 / (1+.00833) ^-360=3.27

Installment = (3.27*150000) / 360=$1325.99