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Finance math: find total interest rate

  1. Mar 27, 2013 #1

    939

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    1. The problem statement, all variables and given/known data

    I am given this question: what is the monthly payment necessary to ammortize a loan of $100 000 at 2.3% compounded monthly for 20 years.

    I know the answer to the above: it is done by using the ammortization payment formula, in this case: R = 100 000 ((0.023/12)/(1-(1+0.023/12)))^-240.

    But then it asks, "how much interest will you have paid after 20 years". Is there some algebraic way to figure this out?

    2. Relevant equations

    Loan: 100 000
    Interest rate: 0.023
    Time: 20 years

    Not sure we need an equation.

    3. The attempt at a solution

    If there is no algebraic way to figure this out, I fear the only way it can be done is to draw an enormous table. Can it be done any simpler?
     
    Last edited: Mar 27, 2013
  2. jcsd
  3. Mar 27, 2013 #2

    SteamKing

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    Homework Helper

    Principal + Interest = Mo. Payment * No. of payments
     
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