Present value

A bank loans a family $90,000 at 4.5% annual interest rate to purchase a house. The family agrees to pay the loan off by making monthly payments over a 15 year period. How much should the monthly payment be in order to pay off the debt in 15 years?

Correct answer:

PMT =  688.494

Step-by-step explanation:

a=90000 p=4.5%=1004.5=0.045 t=15 m=12  n=t m=15 12=180 r=1+p/m=1+0.045/12=800803=180031.0038  b=1rn=11.00381800.4902  PMT=b(r1) a=0.4902(1.00381) 90000=688.494

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