Given:
Loan Amount: $250,000
Loan Terms: 30 years = 360 months = n (convert years to months)
Interest Rate: 7% =
Monthly Loan Payment Formula:
Monthly Loan Payment =
Substitute given values into Monthly Payment Formula:
Monthly Loan Payment =
Monthly Loan Payment = $1,663.26 ( rounded to two decimal places)
Notes:
Total Cost = Monthly Loan Payment * Number of Payments
Total Cost = $1,663.26 * 360 = $598,773.60
Interest Cost = Total Cost – Loan Amount
Interest Cost = $598,773.60 – $250,000 = $348,773.60
Interest Cost is greater than the Loan Amount
Loan Amount: $250,000
Loan Terms: 30 years = 360 months = n (convert years to months)
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 =
250,000 *
0.07
/
12
/
1 – ( 1+ 0.07/12
) -360
Monthly Loan Payment = $1,663.26 ( rounded to two decimal places)
Notes:
Total Cost = Monthly Loan Payment * Number of Payments
Total Cost = $1,663.26 * 360 = $598,773.60
Interest Cost = Total Cost – Loan Amount
Interest Cost = $598,773.60 – $250,000 = $348,773.60
Interest Cost is greater than the Loan Amount
