Question

Find the monthly payments (just PMT) on a 20-year mortgage for $176799 if the annual interest rate is 4.1%.

Answer 1

According to given information the loan amount   is $176799

Rate of interest r = 4.1% = 4.1/100 = 0.041

Compounding frequency is monthly so r = 0.041/12 = 0.00341667

Now number of payments t = 20 x 12 = 240

Now we can use the below formula to find the payment (PMT)

PMT = [ p x r x (1+r)^t ] / [(1+r)^t-1]

PMT = [176799 x 0.00341667 x (1+0.00341667)²⁴⁰ ] / [(1+0.00341667)²⁴⁰-1]

PMT = [604.0638 x 2.26733] / [2.26733 - 1]

PMT = [1369.6119] / [1.26733]

PMT = $1080.7066 ~ $1080.7

So the monthly payment = $1080.7