SOLUTION: A store was purchased for 725,000 and the buyer made a 10% down payment. The balance was financed with a 6.35% loan for 27 years. Find the monthly payment.

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Question 1182343: A store was purchased for 725,000 and the buyer made a 10% down payment. The balance was financed with a 6.35% loan for 27 years. Find the monthly payment.
Found 5 solutions by mananth, MathTherapy, ikleyn, CPhill, n2:
Answer by mananth(16949)   (Show Source):
You can put this solution on YOUR website!

Selling price = 725000
down payment = 10% of 725000 =72500
interest rate = 6.35% =0.0635
time = 27 years = 324 months (27 * 12)
First, we will compute the total interest for the loan
I = P * R * T
I = (725000 - 72500)(0.0635)(27)
I = 1118711.25
Next, compute the maturity value which is the principal plus the interest
M = P + I
M = 652500 + 1118711.25
M = 1770711.25
Now, compute the monthly payment by dividing the maturity value by the number of
months in the loan.
Monthly payment = M ÷ 324
Monthly payment = 1770711.25 ÷ 324
Monthly payment = 5465.16
The monthly payment would be $ 5465.16

Answer by MathTherapy(10704)   (Show Source):
You can put this solution on YOUR website!

A store was purchased for 725,000 and the buyer made a 10% down payment. The balance was financed with a 6.35% loan for 27 years. Find the monthly payment.

No SURPRISE here! That person, AS USUAL, is WRONG!
Correct monthly payment:

Answer by ikleyn(53570)   (Show Source):
You can put this solution on YOUR website!
.
A store was purchased for 725,000 and the buyer made a 10% down payment. The balance was financed
with a 6.35% loan for 27 years. Find the monthly payment.
~~~~~~~~~~~~~~~~~~~~~~~~~~~

        The solution in the post by @mananth is INCORRECT.
        He uses irrelevant methodology, which has no any relation to this problem.
        I came to provide a correct solution using a standard methodology for this kind loan problems.

The loaned amount is 725000 - 0.1*725000 = 652500 dollars. Use the standard formula for the monthly payment for a loan M = where L is the loan amount; r 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 = $652,500; r = ; n = 12*27 = 324. Substitute these values into the formula and get for monthly payment M = = $4215.22. ANSWER. The monthly payment is $4,215.22.

Solved correctly and explained completely.

Answer by CPhill(2189)   (Show Source):
You can put this solution on YOUR website!

Selling price = 725000
down payment = 10% of 725000 =72500
interest rate = 6.35% =0.0635
time = 27 years = 324 months (27 * 12)
First, we will compute the total interest for the loan
I = P * R * T
I = (725000 - 72500)(0.0635)(27)
I = 1118711.25
Next, compute the maturity value which is the principal plus the interest
M = P + I
M = 652500 + 1118711.25
M = 1770711.25
Now, compute the monthly payment by dividing the maturity value by the number of
months in the loan.
Monthly payment = M ÷ 324
Monthly payment = 1770711.25 ÷ 324
Monthly payment = 5465.16
The monthly payment would be $ 5465.16

Answer by n2(47)   (Show Source):
You can put this solution on YOUR website!
.
A store was purchased for 725,000 and the buyer made a 10% down payment.
The balance was financed with a 6.35% loan for 27 years. Find the monthly payment.
~~~~~~~~~~~~~~~~~~~~~~~~~~~

@CPhill copy-pasted the solution by @mananth and placed it under his own name (even without acknowledgment).

So, both "solutions" by @CPhill and by @mananth are identical and both are conceptually incorrect, since they
both use incorrect methodology.

For correct solution, see the post by @ikleyn at this spot.

Ignore both posts by @CPhill and @mananth - their solutions both are irrelevant to the given problem.