Question

# In Exercises $28$ through $31$, use the formula in Exercise $26$ to answer the given question.MORTGAGE PAYMENTS A homeowner puts $\ 35,000$ down on a $\ 350,000$ home and takes out a $30$-year mortgage for the balance. If the interest rate is $6 \%$ per year, compounded monthly, what are the monthly mortgage payments?

Solution

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This task aims to calculate the homeowner's monthly mortgage payment denoted by $M$ so that the house is paid off in $30$ years.

To do this, recall that the amortization formula for compounded monthly interest is:

$M=\frac{\dfrac{Dr}{12}}{1-\left(1+\dfrac{r}{12}\right)^{-12t}}$

where $D$ is the debt, $r$ is the interest rate, and $t$ is the number of years.

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