The table shows the terms of a fixed-rate mortgage.
Which formula should be used to correctly calculate the
monthly mortgage payment?
Component
Cost
OM=P[R(1 - R)")
(1 + R)"
(P) Principal
$200,000
(R) Monthly interest rate
4%
[R(1 + r)")
[(1 + R)" - 1]
(n) Total number of
monthly payments (30-
year term)
360
OM=P-
[(1 + R)" - 1]
(M) Monthly payment
M = p [R(1 + R)"
$1059.85
OMEP (N + R)
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