SOLUTION: I am given the interest rate (.25), the amortization - yearly (10) and the loan amount ($25,000). How do I calculate the monthly payment? I calculated the effective interest ra

Question 958613: I am given the interest rate (.25), the amortization - yearly (10) and the loan amount ($25,000). How do I calculate the monthly payment?
I calculated the effective interest rate by .25/12= .0208.
I keep getting $568.03 for my payment but it's supposed to be $241.40.
The equation I set up was
.0208 + (.0208/((1.0208^-120) -1) X 25000
where did I go wrong?
Answer by macston(5194) (Show Source): You can put this solution on YOUR website!
Is the interest rate actually 25%? Using your given numbers, I get the same result you do. With 2.5% I am closer to your given answer, but still about $6 off. Re-read the problem carefully, your method seems correct.
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