Given:
Loan Amount: $165,000
Loan Terms: 30 years = 360 months = n (convert years to months)
Interest Rate: 3% =
Monthly Loan Payment Formula:
Monthly Loan Payment =
Substitute given values into Monthly Payment Formula:
Monthly Loan Payment =
Monthly Loan Payment = $695.65 ( rounded to two decimal places)
Notes:
Total Cost = Monthly Loan Payment * Number of Payments
Total Cost = $695.65 * 360 = $250,434
Interest Cost = Total Cost – Loan Amount
Interest Cost = $250,434 – $165,000 = $85,434
Loan Amount: $165,000
Loan Terms: 30 years = 360 months = n (convert years to months)
Interest Rate: 3% =
3/100
= 0.03 = 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 =
165,000 *
0.03
/
12
/
1 – ( 1+ 0.03/12
) -360
Monthly Loan Payment = $695.65 ( rounded to two decimal places)
Notes:
Total Cost = Monthly Loan Payment * Number of Payments
Total Cost = $695.65 * 360 = $250,434
Interest Cost = Total Cost – Loan Amount
Interest Cost = $250,434 – $165,000 = $85,434
