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 interest on this $200,000 loan?

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    2021-09-10T05:11:47+00:00

    First we need to find the amount after 20 years

    The formula is

    A=p (1+r/n)^nt

    A future value?

    P present value 200000

    R interest rate 0.045

    n compounded monthly 12

    T time 20 years

    A=200,000×(1+0.045÷12)^(12×20)

    A=491,093.27

    Now find the interest

    I=A-p

    I=491,093.27−200,000

    I=291,093.27…..Answer

    Hope it helps!

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