Given:
[tex]\begin{gathered} Present-value=240000 \\ rate(r)=7\%=0.07 \\ n=term(in-months)=25\times12=300 \end{gathered}[/tex]To Determine: a. What is the monthly payment? b. What is the total amount paid?
c. What is the total interest?
Solution
Using the formula below
[tex]PMT=\frac{PVr(1+r)^n}{(1+r)^n-1}[/tex]Substitute the given
[tex]\begin{gathered} PMT=\frac{240000\times0.07(1+0.07)^{300}}{(1+0.07)^{300}-1} \\ PMT=\frac{16800(1.07)^{300}}{(1.07)^{300}-1} \\ =\frac{16800\times\:1.07^{300}}{653331059.14479} \\ PMT=16800.0002 \end{gathered}[/tex]The total amount paid is
[tex]\begin{gathered} Amount-paid=PMT\times n \\ =16800.00002\times300 \\ =5040000.01 \end{gathered}[/tex]The interest paid is
[tex]\begin{gathered} Interest=Amount-paid)-Present-value \\ =5040000-240000 \\ =4800000 \end{gathered}[/tex]