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Joined 1 year ago
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Cake day: June 9th, 2023

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  • No, it’s not.

    You’re rationale that 8% of 300,000 = 24,000 therefore $2,000/mo., by dumb luck, comes close at 8%.

    • 12% of 300,00 = 36,000/12 = 3,000; actual is $3085/mo
    • 8% of 300,000 = 24,000/12 = 2,000; actual is $2200/mo (not $2025)
    • 4% of 300,000 = 12,000/12= 1,000; actual is $1432/mo
    • 2% of 300,000 = 6,000/12 = 500; actual is $1108/mo
    • 0% of 300,000 = 0/12 = 0; actual is $833/mo

    It’s algebra, not arithmetic.

    P = (r * A) / (1 - (1 + r)^(-n))

    where:

    • P is the monthly payment
    • A is the loan amount
    • r is the monthly interest rate (APR/12)
    • n is the total number of payments