Question

Sarah wants to buy a house for 325000$. She paid 20% as a down payment and obtained a bank loan for the rest. The loan has a nominal interest rate of 10% compounded monthly with a 10-year amortization period.The loan term is 10 years.What are the firm's monthly payments to the bank.

Answer 1

Answer:

Sarah has paid 20% down payment thus, upfront she has paid 65000$ ( 325000$ * 20% )

Thus loan taken will be 260000$

Now we can calculate EMI as we have principle P = 260000$, N = 120 ( monthly comp)  year R = 0.833%

= EMI

= [P x R x (1+R)^N]/[(1+R)^N-1]

= 3441 $

Putting these values in formula we will get answer

= 3441 $ ( approx )