**Monthly payment calculation using formula**:

Let

P = the amount borrowed

r = the monthly interest rate

n = the number of months of the loan

M = the monthly payment

Then,

M = P(1+r)^{n }r / [(1+r)^{n}-1]

**Example 1**:
One borrows $1,000.00 from a credit card company at 18% annually for two
years. What is your monthly payment?

**Solution**: P= $1,000

r = 1.5% per month

n = 24 months

Thus,

M=1,000(1+.015)^{24}(.015)/[(1+.015)^{24}-1]=
$49.92.

**Example 2**:
One borrow a mortgage loan of $150,000.00 from a bank at 6% APR for a
fixed 15 years. What is the monthly payment?

**Solution**:
P=$150,000.00

r = 6% annually=0.5% monthly

n = 15 years = 180 months

Thus,

M=150,000 (1+.005)^{180}(.005)/[1.005^{180}-1]=$1,265.79.