Given:
Loan Amount: $30,000
Loan Terms: 30 years = 360 months = n (convert years to months)
Interest Rate: 5.6% =
Monthly Loan Payment Formula:
Monthly Loan Payment =
Substitute given values into Monthly Payment Formula:
Monthly Loan Payment =
Monthly Loan Payment = $172.22 ( rounded to two decimal places)
Notes:
Total Cost = Monthly Loan Payment * Number of Payments
Total Cost = $172.22 * 360 = $61,999.20
Interest Cost = Total Cost – Loan Amount
Interest Cost = $61,999.20 – $30,000 = $31,999.20
Interest Cost is greater than the Loan Amount
Loan Amount: $30,000
Loan Terms: 30 years = 360 months = n (convert years to months)
Interest Rate: 5.6% =
5.6/100
= 0.056 = r (convert percent to a decimal)Monthly Loan Payment Formula:
Monthly Loan Payment =
Loan Amount *
r
/
12
/
1 – ( 1+ r/12
) -n
Substitute given values into Monthly Payment Formula:
Monthly Loan Payment =
30,000 *
0.056
/
12
/
1 – ( 1+ 0.056/12
) -360
Monthly Loan Payment = $172.22 ( rounded to two decimal places)
Notes:
Total Cost = Monthly Loan Payment * Number of Payments
Total Cost = $172.22 * 360 = $61,999.20
Interest Cost = Total Cost – Loan Amount
Interest Cost = $61,999.20 – $30,000 = $31,999.20
Interest Cost is greater than the Loan Amount
