the table shows the terms of a fixed - rate mortgage. which formula should be used to correctly calculate…

the table shows the terms of a fixed - rate mortgage. which formula should be used to correctly calculate the monthly mortgage payment?\n|component|cost|\n|--|--|\n|(p) principal|$200,000|\n|(r) monthly interest rate|.4%|\n|(n) total number of monthly payments (30 - year term)|360|\n|(m) monthly payment|$1059.85|\n$m = p\frac{r(1 - r)^n}{(1 + r)^n}$\n$m = p\frac{r(1 + r)^n}{(1 + r)^n - 1}$\n$m = p\frac{r}{(1 + r)^n - 1}$\n$m = p\frac{r(1 + r)^n}{(n + r)}$

the table shows the terms of a fixed - rate mortgage. which formula should be used to correctly calculate the monthly mortgage payment?\n|component|cost|\n|--|--|\n|(p) principal|$200,000|\n|(r) monthly interest rate|.4%|\n|(n) total number of monthly payments (30 - year term)|360|\n|(m) monthly payment|$1059.85|\n$m = p\frac{r(1 - r)^n}{(1 + r)^n}$\n$m = p\frac{r(1 + r)^n}{(1 + r)^n - 1}$\n$m = p\frac{r}{(1 + r)^n - 1}$\n$m = p\frac{r(1 + r)^n}{(n + r)}$

Answer

Answer:

B. $M = P\frac{[R(1 + R)^n]}{[(1 + R)^n-1]}$

Explanation:

Step1: Recall mortgage - payment formula

The formula for the monthly payment $M$ of a fixed - rate mortgage is $M = P\frac{[R(1 + R)^n]}{[(1 + R)^n-1]}$, where $P$ is the principal amount of the loan, $R$ is the monthly interest rate, and $n$ is the total number of monthly payments. This formula is derived from the present - value of an ordinary annuity concept in finance.