Answer:
$259 532
Step-by-step explanation:
Step 1. Calculate the monthly payments on a 30-year loan.
The formula for the monthly payment (P) on a loan of A dollars that is paid back in equal monthly payments over n months, at an annual interest rate
of r % is
[tex]P = A(\frac{r}{1-(1+r)^{-n}})[/tex]
Data:
We must express the interest rate on a monthly basis.
i = 6.55 %/yr = 0.545 83 %/mo = 0.005 4583
A = $425 500
n = 360 mo
Calculation:
[tex]P = 425 500(\frac{0.005 4853}{1-(1+0.005 4583)^{-360}})[/tex]
[tex]P = \frac{2332.22}{{1- {1.005 4583}}^{-360}}[/tex]
[tex]P = \frac{2332.52}{1 – 0.140907}[/tex]
[tex]P = \frac{2332.52}{0.859 093}[/tex]
P = $2703.46
B. Total Payment (T) after 8 years
T = nP
T = 96 × 2703.46
T = $259 532
Michael will have paid $259 532 at the end of eight years.
