Use the formula of the present value of annuity ordinary to find the monthly payment of the loan
The formula is
Pv=pmt [(1-(1+r/k)^(-kn))÷(r/k)]
Pv present value 75500
PMT monthly payment?
R interest rate 0.065
K compounded monthly 12
N time 40 years
So we need to solve for pmt
PMT=Pv÷[(1-(1+r/k)^(-kn))÷(r/k)]
PMT=75,500÷((1−(1+0.065÷12)^(
−12×40))÷(0.065÷12))
=442.02 (this is the monthly payment)
Now find the amount of interest
Total interest=total paid-present value
Present value=75500
Total paid
442.02×12months×40years
=212,169.6
Total interest=212,169.6−75,500
=136,669.6
The answer is 136,669.6
