Alanna plans to add an extension on to her home. She applied for a loan of $30 000. Loans are available for five years at 8.9% per year, compounded monthly.

A) Determine Alannas monthly payment for time period of five years.

b) Calculate the total interest paid for time period of five years.

Payment of an Annuity So far we have calculated the FV and PV today we will determine the PMT (regular payment) Rearranging the formula for FV and PV of an ordinary annuity for PMT: PMT[(1+i)"-1 PMT [1-(1+i)"] FV PV i PMT i FV (1+1)"-1 PMT i.PV 1-(1+r)