Answer:
Option C - $1,097.50
Step-by-step explanation:
Given : $175,000 financing and obtained a 30-year, fixed-rate mortgage with a 6.425% interest rate.
To find : The monthly payments
Solution : To find monthly payments the formula is
Monthly payment = Amount / Discount factor
Discount factor [tex]D=\frac{1-(1+i)^{-n}}{i}[/tex]
Where, Amount(A)=$175,000 , Rate(r)= 6.425%=0.06425, Time = 30 year
[tex]i=\frac{0.06425}{12}=0.00535416666667[/tex]
Time(in months) n=30 × 12= 360
Put value in D we get,
[tex]D=\frac{1-(1+i)^{-n}}{i}[/tex]
[tex]D=\frac{1-(1+0.00535416666667)^{-360}}{0.00535416666667}[/tex]
[tex]D=\frac{1-(1.00535416666667)^{-360}}{0.00535416666667}[/tex]
[tex]D=\frac{1-0.146261631144}{0.00535416666667}[/tex]
[tex]D=\frac{0.853738368856}{0.00535416666667}[/tex]
[tex]D=159.453080564[/tex]
Monthly payment [tex]M=\frac{A}{D}[/tex]
[tex]M=\frac{175,000}{159.453080564}[/tex]
[tex]M=1097.50153074[/tex]
Approx. monthly payment = $1097.50
Therefore, Option C is correct - $1097.50
