Given:
Loan Amount: $300,000
Loan Terms: 60 months = n
Interest Rate: 7% =
Monthly Loan Payment Formula:
Monthly Loan Payment =
Substitute given values into Monthly Payment Formula:
Monthly Loan Payment =
Monthly Loan Payment = $5,940.36 ( rounded to two decimal places)
Notes:
Total Cost = Monthly Loan Payment * Number of Payments
Total Cost = $5,940.36 * 60 = $356,421.60
Interest Cost = Total Cost – Loan Amount
Interest Cost = $356,421.60 – $300,000 = $56,421.60
Loan Amount: $300,000
Loan Terms: 60 months = n
Interest Rate: 7% =
7/100
= 0.07 = 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 =
300,000 *
0.07
/
12
/
1 – ( 1+ 0.07/12
) -60
Monthly Loan Payment = $5,940.36 ( rounded to two decimal places)
Notes:
Total Cost = Monthly Loan Payment * Number of Payments
Total Cost = $5,940.36 * 60 = $356,421.60
Interest Cost = Total Cost – Loan Amount
Interest Cost = $356,421.60 – $300,000 = $56,421.60