Chapter 11.4, Problem 68E

To determine

To find the monthly principal and interest payment.

Answer to Problem 68E

Monthly principle and interest is $\$7871$ .

Explanation of Solution

Given:

The home mortgage of $\$90000$ for $30$ years at interest rate of $11.5\%$ .

Calculation:

The formula is

  $N=N_0{\left(1+\frac{r}{n}\right)}^{nt}$

Here, $N$ is the final amount, $N_0$ is the initial amount, $r$ is the growth rate, $n$ is the annual year, and t is the years.

Substitute, $N_0=\$90000,r=0.115,n=365,\text{ and }t=30$ in the formula-

  $\begin{array}{l}N=N_0{\left(1+\frac{r}{n}\right)}^{nt}\\ N=90,000{\left(1+\frac{0.115}{365}\right)}^{365(30)}\\ N=2833495\end{array}$

Therefore, total amount after 30 years is $\$2833495$ .

Yearly amount is $\$94450$ .

Monthly principle and interest is $\$7871$ .