Mortgage Project – Spring B 2017 This project may be completed by teams of two students or as an individual project. Reports submitted by teams of two students earn a bonus of 10 points added to their score. Your best friend wants your help reviewing m

Loan Payment Formula for Installment Loans

The regular payment amount, PMT, required to repay a loan of P dollars paid n times per year over t years at an annual rate r is given by

nt

n r

n r

P PMT −

⎟ ⎠ ⎞

⎜ ⎝ ⎛ +−

⎟ ⎠ ⎞

⎜ ⎝ ⎛

= 11

On a scientific calculator you will need to enter extra parentheses to ensure the calculations are done in the correct order. The denominator and the exponent need to be inside parentheses.

⎟ ⎟ ⎠

⎞ ⎜ ⎜ ⎝

⎛ ⎟ ⎠ ⎞

⎜ ⎝ ⎛ +−

⎟ ⎠ ⎞

⎜ ⎝ ⎛

= − )(

11 nt

n r n r

P PMT

The key sequence would be

=×−÷+−÷÷× ))()^1(1( tnnrnrP Note: (1)To raise to a power you may need to use ^ or yx or xy. (2) You may need to enter n first and then press the (-) sign key. Example: Calculate the monthly payment for a loan of $200,000 if the interest rate is 8% and the loan is for 20 years. P = 200,000; r = 0.08; n = 12; t = 20

88.672,1$ 880123798.1672))2012()^1208.1(1(1208.200000 ≈

=×−÷+−÷÷×