# Monthly payment amount

• Mar 16th 2007, 10:31 PM
sissylove
Monthly payment amount
Amount of purchases=15,000. Down payment= 2,000. Rate of interest=8%. Term of loan=5 yrs. Monthly payment amount (P and I)=? Find the Monthly payment amount. the answer i got is 322.80.

I did the problem by A = 13000(1 + .08/12)^(12*5) = \$19,367.99
Monthly payment = \$322.80.

My friend said i did the problem wrong and she got \$263.64 and wont explain how. I am so lost.

my other problem is like this

2.) Amount of purch.= 128,000. DP= 30,000. Rate of interest=5%. Term of loan is 30 years. What is the monthly payment amount (P. & I.)?

My answer came out to be A = 98000(1 + .05/12)^(12*30) = \$437,838.94
Monthly payment = \$1,216.22. wrong again?
• Mar 17th 2007, 07:40 AM
Soroban
Hello, sissylove!

Quote:

Amount of purchases: \$15,000. .Down payment: \$2,000
Rate of interest: 8%. .Term of loan: 5 yrs.

Find the Monthly payment.

I did the problem by: .A .= .13000(1 + .08/12)^(12*5) .= .\$19,367.99
Monthly payment: .\$19,367.99 ÷ 60 .= .\$322.80

My friend said i did the problem wrong and she got \$263.64 . She's right
. . and wont explain how. . She's mean!

What you found is the total amount we'd owe if we made no payments.
They would charge us interest on the entire \$13,000 for the entire five years.
Then we would pay them \$19,367.99 at the very end.

The problem is an "Amortization", like car loans and home mortgages.
And this requires a special formula . . . and you're expected to know it.

. . . . . . . . . i(1 + i)^n
. . A .= .P·----------------
. . . . . . . .(1 + i)^n - 1

where P is the amount of the loan, i is the periodic interest rate
. . and n is the number of periods.

We have: .P = 13000, . i = 0.08/12, .n = 60

. . . . . . . . . . . . . . . (0.08/12)(1 + 0.08/12)^60
Then: . A .= .13,000·--------------------------------- . = . 263.5931259
. . . . . . . . . . . . . . . . . (1 + 0.08/12)^60 - 1

Therefore, the monthly payment is \$263.59

• Mar 20th 2007, 05:43 PM
sissylove
I am having trouble putting the steps into action and down on paper. I'm still not sure how to do it. 13000(1 + .08/12)^(12*5) is making me confused. the ^ is really throwing me off. do i take the answr from the 1 + .08 / 12 and add it to the 12*5?? I am very sorry. I thought i understood this but i dont.
• Jun 16th 2007, 04:33 PM
neverlosehope