Joe and Victoria take out a $200,000 loan for a real estate investment. The $200,000 is compounded monthly for 20 years at a 4.5% interest r

Question

Joe and Victoria take out a $200,000 loan for a real estate investment. The $200,000 is compounded monthly for 20 years at a 4.5% interest rate. What is the estimated total amount paid on the loan?

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    2021-09-10T05:29:44+00:00

    Use the Compound Amount formula:

    A = P(1 + r/n)^(nt), where P is the principal ($200,000), r is the interest rate as a decimal fraction (0.045), n is the number of compounding periods (240), and t is the number of years (20).

    In this case

    A = $200,000 ( 1 + 0.045/12)^(12*20)

       = $491,093.27

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