Question

Perry Mazza wants to borrow $30,000 from the bank. The interest rate is 5% and the term is for 5 years.

What is the approximate monthly payment amount?
Responses

$625
$625

$1,500
$1,500

$300
$300

$525
$525

Answer 1

Monthly rate r = 0.05/12 = 0.0041667, n = 60 months.

Payment = P * [r / (1 - (1+r)^-n)] = 30,000 * [0.0041667 / (1 - (1.0041667)^-60)] ≈ $566.28.

Closest given choice: $525.