Question

You want to buy a house that is priced $175,000. You went to Wachovia bank and applied for a 30 year loan with 6.5% annual interest rate. How much your monthly payments are going to be?

Answer 1

Given that;
Present value =$175,000
Future value=$0
Time period is 30 years.
As the payments will be made monthly, the number of periods=30*12=360
Annual interest rate is 6.5%, as the payments will be made monthly, the rate=6.5%/12=0.005416667
We can determine the monthly payment amount using excel as:

Answer: Hence, the monthly payment amount is $1,106.12