Question 1075940
A)The following formula is used to calculate the fixed monthly payment (P) required to fully amortize a loan of L dollars over a term of n months at a monthly interest rate of c. [If the quoted rate is 6%, for example, c is .06/12 or .005].
P = L[c(1 + c)^n]/[((1 + c)^n)) - 1].
So, we have:
P=216000((.00375*(1+.00375)^360))/((1+.00375)^360)-1)))
P=216000(0.01442886768736313153815180601079/(2.847698049963501743507148269543)
P=216000(0.00506685309825880826287390636924)=$1094.44 as the required monthly payment.
B)Using the same formula as last time, we have:
P=216000((.00375*(1+.00375)^240))/((1+.00375)^360)-1)
P=216000 (0.00632649376219962420615722743331)
P=$1366.52 as the monthly payment.
C)Savings in interest would be:
(1094.44*360)-(1366.53*240)=$66032.96 in savings. ☺☺☺☺