Question

You need a $188,500 loan. Compute the monthly payment for each of the loan options listed below. Assume that loans are a fixed rate.

Option 1: a 30 year-loan at an APR of 5.75%

Option 2: a 15 year loan at 4.5%

Answer 1

Ans Option 1: $ 1100.03

P =	Regular Payments
PV =	Loan Amount
r =	rate of interest
n =	no of periods
P =	r (PV)
	1 - (1 + r )^-n
P =	(5.75%/12)*188500
	1 - (1 / (1 + 5.75%/12)^360))
P =	903.2291667
	0.821091422
P =	1100.03

Ans Option 2: $ 1442.01

P =	r (PV)
	1 - (1 + r )^-n
P =	(4.5%/12)*188500
	1 - (1 / (1 + 4.5%/12)^180))
P =	706.875
	0.490200379
P =	1442.01