Using simple interest, it is found that the monthly payments are of $1,093.1.
Simple Interest
- The amount of money after t years in simple interest is modeled by:
[tex]A(t) = A(0)(1 + rt)[/tex]
In which:
- A(0) is the initial amount.
- r is the interest rate, as a decimal.
In this problem:
- House price of $165,000, 10% down payment, hence the principal amount that will be subjected to interest is [tex]P = 0.9(165000) = 148500[/tex].
- Interest rate of 5.5%, hence [tex]r = 0.055[/tex].
- For 30 years, hence [tex]t = 30[/tex].
Then, the total amount paid will be of:
[tex]A(t) = 148500[1 + 0.055(30)] = 393525[/tex]
Considering each year has 12 months, the monthly payments will be of:
[tex]M = \frac{393525}{30(12}} = 1093.1[/tex]
The monthly payments are of $1,093.1.
To learn more about simple interest, you can take a look at https://brainly.com/question/25296782
