Oprah Winfrey has closed on a 42-acre estate near Santa Barbara, California, for $50,000,000. If Oprah puts 20% down and finances at 7% for 30 years, what would her monthly payment be?
4 answers
LOL! Someone asked this same question yesterday... but did not respond when I asked what is the compounding of the loan??
It was me, I am sorry I did not see what you posted. This problem is related to PMT and then you're supposed to find interest with P1 and P2.
Steve wrote a nice solution several years back...
M = Pr/(1-(1+r)^-n)
= 40,000,000*(.07/12)/(1-(1+.07/12)^(-12*30))
= 266121
M = Pr/(1-(1+r)^-n)
= 40,000,000*(.07/12)/(1-(1+.07/12)^(-12*30))
= 266121
I will assume the compounding is monthly to match the payment period, or else we have a messy solution
i = .07/12 = .00583333...
n = 360
paym(1 - 1.0058333..^-360)/.00583333... = .8(50000000)
i = .07/12 = .00583333...
n = 360
paym(1 - 1.0058333..^-360)/.00583333... = .8(50000000)
2 answers