SOLUTION: A man buys a house for $95,000. He makes a $15,000 down payment and amortizes the rest of the debt with monthly payment over the next 15 years. The interst rate on the debt is 12%,

Question 86580: A man buys a house for $95,000. He makes a $15,000 down payment and amortizes the rest of the debt with monthly payment over the next 15 years. The interst rate on the debt is 12%, compound monthly. Find the size of each payment.
Really lost please help!!!!!
Answer by stanbon(75887) (Show Source): You can put this solution on YOUR website!
A man buys a house for $95,000. He makes a $15,000 down payment and amortizes the rest of the debt with monthly payment over the next 15 years. The interest rate on the debt is 12%, compound monthly. Find the size of each payment.
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loan balance = original amount(1+i)^n - [P/i][(1+i)^n - 1]
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You want loan balance to be 0
original amount = 95000-15000=80000
i=0.12/12=0.01
n=15*12 = 180 payments
P is the monthly payment
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0 = 80000(1.01)^180 - [P/0.01][(1.01)^180 -1]
P/0.01 = 479664.158/4.995801975
P/0.01 = 96013.44496
P =$960.13 (this is the monthly payment)
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Cheers,
Stan H.
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