Question

24. Third Federal offers a 30 year, zero point, conventional loan. The product rate is 4.56% with monthly payments. Calculate the monthly payment on a $325,000 loan.

a.1,658.33
b.1,672.25
c.1,678.33
d.1,683.22

Answer 1

Solution:
	Answer is a. 1,658.33
Working Notes:
	present value of annuity = Px[ 1-1 /(1 + i)^n)]/ i
	P=monthly payment = ??
	i= interest rate per period = 4.56%/12
	n= no. Of period = 12 x 30 =360
	PV of annuity= loan $325,000
	present value of annuity = Px[ 1-1 /(1 + i)^n)]/ i
	325,000 = P x (1-1/(1+(4.56%/12))^360)/(4.56%/12)
	or 325,000 = P x 195.9798253
	P= 325,000/195.9798253
	P= $1658.333961
	P= $1658.33
	Monthly payment on a $325,000 loan is $1658.33
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