Question

draw a timeline, show the formula, and include your calculator inputs.

What will the monthly payment be on a $250,000 loan, assuming the nominal rate of interest is 6% and the loan will be repaid over a period of 15 years? Assume the first payment will be made one month from today

Answer 1

EMI = $2109.64

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If the loan amount is P, rate on interest (monthly is r, and loan term is n the EMI will be

EMI = P*r[(1 +r)^n]/ [(1+ r)^n- 1]

Where,

              Loan amount (P) = $250000

                Time (n) = 180 Period

               Interest rate [r] = 0.5% /Period

Let's put all the values in the formula to calculate EMI

EMI = 250000*0.005[(1+0.005)^180]/ [(1+ 0.005)^180- 1]

= 1250[(1.005)^180]/ [(1.005)^180- 1]

= 1250[2.4540935622]/ [2.4540935622- 1]

= 1250[2.4540935622]/ [1.4540935622]

= 1250[1.68771365611923]

= 2109.64