Question

Consider a home mortgage of $250,000 at a fixed APR of 4.5% for 25 years.

a. Calculate the monthly payment.
b. Determine the total amount paid over the term of the loan.
c. Of the total amount paid, what percentage is paid toward the principal and what
percentage is paid for interest.
a. The monthly payment is $
(Do not round until the final answer. Then round to the nearest çent as needed.)

Answer 1

Answer: 1,389.58

M is the monthly payment.

P is the principal loan amount (in this case, $250,000).

r is the monthly interest rate (annual rate divided by 12). For an APR of 4.5%,

=

0.045

12

r=

12

0.045

​

.

n is the total number of payments (number of years multiplied by 12). For 25 years,

=

25

×

12

n=25×12.