shelley purchased a home in Myland Heights, MO, for $204,000. Her down payment was 20% of the cash price, and she obtained a mortgage for 20 years at 7%.
20% of amount is paid on cash
20% of 204,000 is 0.2* 204,000= 40800
Remaining amount of loan to be paid = 204,000 - 40,800=163,200
Now we apply monthly loan payment formula
[tex]MP = \frac{\frac{r}{n}*PV}{1-(1+\frac{r}{n})^{-nt}}[/tex]
MP is the monthly payment amount
PV is the loan amount
r is the interest rate
n is the number of payments per year
t is the time in years
Interest rate is 7% = 0.07. so r= 0.07
n = 12, t= 20 , PV= 163200
Plug in all the values in the formula
[tex]MP = \frac{\frac{0.07}{12}*163200}{1-(1+\frac{0.07}{12})^{-12*20}}[/tex]
MP = 1265.28786
So answer is D
