Mr. and Mrs. Wong purchased their new house for $350,000. They made a down payment of 20%, and amortized the rest over 30 years. If the interest rate is 4.2%, which of the following is their correct monthly mortgage payment?
Accepted Solution
A:
Answer:$1,369.25Step-by-step explanation:Mr. and Mrs. Wong purchased their new house for $350,000.They made a down payment of 20%Down payment = 20% of 350000 = $70,000 Loan amount, P = $350,000 - $70,000 = $280,000Rate of interest, r = 4.2% or 0.042Time, t = 30 years Number of period, n = 12 ( monthly )Formula: [tex]E=\dfrac{P\cdot \frac{r}{n}}{1-(1+\frac{r}{n})^{-n\cdot t}}[/tex]Substitute the values into formula [tex]E=\dfrac{280000\cdot \frac{0.042}{12}}{1-(1+\frac{0.042}{12})^{-12\cdot 30}}[/tex]E = $1,369.25Hence, The monthly payment for their mortgage will be $1,369.25