SOLUTION: What monthly payment is required to amortize a loan of $50,000 over 10 years if interest at the rate of 6%/year is charged on the unpaid balance and interest calculations are made

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Question 1200913: What monthly payment is required to amortize a loan of $50,000 over 10 years if interest at the rate of 6%/year is charged on the unpaid balance and interest calculations are made at the end of each month? (Round your answer to the nearest cent.)
Found 4 solutions by mananth, MathTherapy, math_tutor2020, ikleyn:
Answer by mananth(16949) About Me  (Show Source):
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We are paying interest on the unpaid balance on a regular basis the formula needed is given by
P+=%28+A%2Ar%2F%281+-+%281%2Br%29%5E%28-n%29%29%29
P = payment amount
A = amount financed = 50000
r = decimal interest rate adjusted for periodicity 6% over 10 years
0.006 /month
n = total number of payments made 10 years 12 months 120 months



P= 50000 * 0.006/( 1 - (1+ 0.006)^ -120


= 300 / 1 ^ -120

= 300 / 1 - 1.006 ^-120
=300 / 1 - 0.487800581

=300 / 0.512199419

= $585.709





Answer by MathTherapy(10827) About Me  (Show Source):
You can put this solution on YOUR website!
What monthly payment is required to amortize a loan of $50,000 over 10 years if interest at the rate of 6%/year is charged on the unpaid balance and interest calculations are made at the end of each month? (Round your answer to the nearest cent.)

Correct answer: $555.10

Answer by math_tutor2020(3837) About Me  (Show Source):
You can put this solution on YOUR website!

Answer: $555.10

Work Shown:

The formula to use is
P = (L*i)/( 1-(1+i)^(-n) )
where,
P = monthly payment
L = loan amount
i = monthly interest rate in decimal form
n = number of months

In this case
L = 50000
i = 0.06/12 = 0.005
n = 10*12 = 120 months

Then,
P = (L*i)/( 1-(1+i)^(-n) )
P = (50000*0.005)/( 1-(1+0.005)^(-120) )
P = 555.102509708256
P = 555.10

The answer can be confirmed with a calculator such as this one
https://www.calculator.net/loan-calculator.html

Answer by ikleyn(53816) About Me  (Show Source):
You can put this solution on YOUR website!
.
What monthly payment is required to amortize a loan of $50,000 over 10 years if interest at the rate of 6%/year
is charged on the unpaid balance and interest calculations are made at the end of each month?
(Round your answer to the nearest cent.)
~~~~~~~~~~~~~~~~~~~~~~~~~~~~


        Calculations in the post by @mananth are fatally incorrect.
        I came to provide a correct solution. 


Use the standard formula for the monthly payment for a loan

    M = L%2A%28r%2F%281-%281%2Br%29%5E%28-n%29%29%29


where L is the loan amount;  r = 0.06%2F12 = 0.005  is the effective interest rate per month;
n is the number of payments (same as the number of months); M is the monthly payment.


In this problem  P = $50000;  r = 0.06%2F12 = 0.005;  n = 12*20 = 240


Substitute these values into the formula and get for monthly payment

    M = 50000%2A%280.005%2F%281-%281.005%2F12%29%5E%28-240%29%29%29 = $555.10.


ANSWER.  The monthly payment is $555.10.

Solved correctly.

By observing many solutions by @mananth on loan/mortgage problems,
I conclude that this person simply does not know the subject.