Given:
Loan Amount: $100,000
Loan Terms: 30 years = 360 months = n (convert years to months)
Interest Rate: 16% =
Monthly Loan Payment Formula:
Monthly Loan Payment =
Substitute given values into Monthly Payment Formula:
Monthly Loan Payment =
Monthly Loan Payment = $1,344.76 ( rounded to two decimal places)
Notes:
Total Cost = Monthly Loan Payment * Number of Payments
Total Cost = $1,344.76 * 360 = $484,113.60
Interest Cost = Total Cost – Loan Amount
Interest Cost = $484,113.60 – $100,000 = $384,113.60
Interest Cost is greater than the Loan Amount
Loan Amount: $100,000
Loan Terms: 30 years = 360 months = n (convert years to months)
Interest Rate: 16% =
16/100
= 0.16 = 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 =
100,000 *
0.16
/
12
/
1 – ( 1+ 0.16/12
) -360
Monthly Loan Payment = $1,344.76 ( rounded to two decimal places)
Notes:
Total Cost = Monthly Loan Payment * Number of Payments
Total Cost = $1,344.76 * 360 = $484,113.60
Interest Cost = Total Cost – Loan Amount
Interest Cost = $484,113.60 – $100,000 = $384,113.60
Interest Cost is greater than the Loan Amount
