document.write( "<A HREF=/cgi-bin/jump-to-question.mpl?question=958620>Question 958620</A>: <I><SPAN STYLE=\"word-break: break-all;\"> I am given the interest rate (.25%), the amortization - yearly (10) and the loan amount ($25,000). How do I calculate the monthly payment? <BR>\n" );
document.write( " I calculated the effective interest rate by .0025/12= 2.0833 E^-4.  I don't how to use that. \r<BR>\n" );
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document.write( " where did I go wrong?\r<BR>\n" );
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document.write( "(I submitted this question earlier with an incorrect interest rate.  I had said it was 25%, but it's .25%. </SPAN>\n" );
document.write( "</I><HR><TABLE width=100%><TR><TD><B><A HREF=http://www.algebra.com/>Algebra.Com's</A> Answer #585861 by </B><A HREF=/tutors/aboutme.mpl?userid=addingup><B>addingup(3677)</B></A><img src=\"/images/stars/stars-13.gif\" alt=\"\" >&nbsp;<A HREF=/tutors/aboutme.mpl?userid=addingup><IMG SRC=http://www.algebra.com/images/aboutme-small.gif BORDER=0 alt=\"About Me\" VALIGN=MIDDLE></A>&nbsp;<IMG SRC=http://www.algebra.com/cgi-bin/show-face.mpl?user=addingup><BR>You can <A HREF=\"/cgi-bin/embed-solution.mpl?show=1&solution=585861\">put this solution on YOUR website!</A><BR><SPAN STYLE=\"word-break: break-all;\"> It cannot be 0.25% per year.. If the 0.25% is correct, then it is the MONTHLY rate, which adds up to 3% per year. Could it be 2.5% per year?<BR>\n" );
document.write( "Here is an example you can follow once you clarify the interest rate issue, I will use 2.5%/year (0.025):<BR>\n" );
document.write( "-------------------<BR>\n" );
document.write( "Step 1 - Monthly Rate (precisely, banker-style)<BR>\n" );
document.write( "Monthly rate = <IMG STYLE=\"max-width:80%;\" SRC=/cgi-bin/plot-formula.mpl?expression=%281%2Bannual+rate%29%5E%281%2F12%29%28-1%29 ALIGN=MIDDLE  ALT=\"%281%2Bannual+rate%29%5E%281%2F12%29%28-1%29\"   DISABLED_style= \"max-width:90%; height:auto;\" ><BR>\n" );
document.write( "Monthly rate= <IMG STYLE=\"max-width:80%;\" SRC=/cgi-bin/plot-formula.mpl?expression=%281%2B0.025%29%5E%281%2F12%29%28-1%29 ALIGN=MIDDLE  ALT=\"%281%2B0.025%29%5E%281%2F12%29%28-1%29\"   DISABLED_style= \"max-width:90%; height:auto;\" ><BR>\n" );
document.write( "Monthly rate= ~0.0020598<BR>\n" );
document.write( "NOTE: One of the most common mistakes is to simply divide annual rate by 12 to get monthly rate. However, you are not a banker. If you don't need to be THAT precise, then just take .025/12= 0.0021.<BR>\n" );
document.write( "--------------------<BR>\n" );
document.write( "Step 2 - Find monthly payment:<BR>\n" );
document.write( "A = monthly payment amount<BR>\n" );
document.write( "P = loan amount (25,000)<BR>\n" );
document.write( "i = monthly interest rate (the one we figured out above, 0.0020598)<BR>\n" );
document.write( "n = total number of payments (10 years x 12 months= 120 payments)<BR>\n" );
document.write( "<IMG STYLE=\"max-width:80%;\" SRC=/cgi-bin/plot-formula.mpl?expression=A=P%2Ai%2F1-%281%2Bi%29%5En ALIGN=MIDDLE  ALT=\"A=P%2Ai%2F1-%281%2Bi%29%5En\"   DISABLED_style= \"max-width:90%; height:auto;\" ><BR>\n" );
document.write( "<IMG STYLE=\"max-width:80%;\" SRC=/cgi-bin/plot-formula.mpl?expression=A=+25000%2A0.0020598%2F1-%281.0020598%29%5E-120 ALIGN=MIDDLE  ALT=\"A=+25000%2A0.0020598%2F1-%281.0020598%29%5E-120\"   DISABLED_style= \"max-width:90%; height:auto;\" ><BR>\n" );
document.write( "<IMG STYLE=\"max-width:80%;\" SRC=/cgi-bin/plot-formula.mpl?expression=A=+235.35 ALIGN=MIDDLE  ALT=\"A=+235.35\"   DISABLED_style= \"max-width:90%; height:auto;\" > </SPAN>\n" );
document.write( "</TD></TR></TABLE>\n" );