How do I calculate the monthly payment required to repay a $250,000 loan in 15 years at 5.75% interest compounded monthly?
monthly rate = .0575/12 = .004791666..
n = 12(12) = 180
P ( 1 - 1.00479166..^-180)/.00479166.. = 250000
I get P = $ 2076.03
To calculate the monthly payment required to repay a loan, you can use the formula for the monthly payment on an amortizing loan. The formula is:
M = P * (r * (1+r)^n) / ((1+r)^n - 1)
Where:
M = Monthly payment
P = Principal amount (loan amount)
r = Monthly interest rate (%)
n = Number of monthly payments
Let's calculate the monthly payment for your loan:
Principal amount (P) = $250,000
Monthly interest rate (r) = Annual interest rate / 12 / 100
= 5.75% / 12 / 100
= 0.004792 (approx.)
Number of monthly payments (n) = Number of years * 12
= 15 * 12
= 180
Now, plug these values into the formula:
M = $250,000 * (0.004792 * (1+0.004792)^180) / ((1+0.004792)^180 - 1)
Using a calculator or spreadsheet software, simplify and solve the equation to find the monthly payment (M).
After performing the calculations, the monthly payment for a $250,000 loan at 5.75% interest compounded monthly, to be repaid in 15 years, will be approximately $2,086.47.