Question

Consider a 30-year fixed-rate home loan of $412,500 with an interest rate of 5.125%. What is the monthly payment? (Round your

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Answer #1
Monthly payment = Loan amount / Present value of annuity of 1
= $       4,12,500 / 183.6591
= $       2,246.01
Working:
Present value of annuity of 1 = (1-(1+i)^-n)/i Where,
= (1-(1+0.004271)^-360)/0.004271 i = 5.125%/12 = 0.004271
= 183.6591234 n = 30*12 = 360
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