The monthly payment (M) of a loan (P) for (n) years and interest rate (r) can be calculated by the formula: M = P(r/12) 1-(1+r)-12n 12 to. Calculate the monthly payment if you borrow $85,000 for 15 years at an annual interest rate of 5.75%. Define the variables P, r, n and calculate the monthly payment M. You must create a function titled MP and pass it the variables P, r, n so that the function calculates M. The variable r must not be a percentage. For example, if the interest rate is 5%, r must be 0.05. b. Calculate the total amount needed to repay the loan at the end of 15 years. This is calculated by multiplying M*12*n. c. Make a graph of how the monthly loan payment varies depending on the years to pay off the loan (in other words, M vs. n). In this graph you should notice that as you increase the term to pay the loan (n), it causes the monthly payment (M) to decrease. Make a graph from year 1 to year 30. d. To analyze the effect of increasing the number of years to pay the loan, make another graph (financing cost vs n) to determine the financing cost of increasing the number of years to pay the loan. The financing cost is determined using cost = M*12*n - P. Make a graph from year 1 to years 30. and. After making both graphs, you should realize that increasing the term to pay a loan is not a very good idea.

Using MatLab

The monthly payment (M) of a loan (P) for (n) years and interest rate (r) can be calculated by the formula: M=P(r/12)1(1+r)12n12 to. Calculate the monthly payment if you borrow $85,000 for 15 years at an annual interest rate of 5.75%. Define the variables P,r,n and calculate the monthly payment M. You must create a function titled MP and pass it the variables P,r,n so that the function calculates M. The variable r must not be a percentage. For example, if the interest rate is 5%,r must be 0.05 . b. Calculate the total amount needed to repay the loan at the end of 15 years. This is calculated by multiplying M12n. c. Make a graph of how the monthly loan payment varies depending on the years to pay off the loan (in other words, M vs. n ). In this graph you should notice that as you increase the term to pay the loan (n), it causes the monthly payment (M) to decrease. Make a graph from year 1 to year 30 . d. To analyze the effect of increasing the number of years to pay the loan, make another graph (financing cost vs n ) to determine the financing cost of increasing the number of years to pay the loan. The financing cost is determined using cost =M12nP. Make a graph from year 1 to years 30 . and. After making both graphs, you should realize that increasing the term to pay a loan is not a very good idea