Chapter 1, Problem 27P

The monthly payment M of a mortgage P for n years with a fixed annual interest rate r can be calculated by the formula:

$M=P\frac{\frac{r}{12}{\left(1+\frac{r}{12}\right)}^{12n}}{{\left(1+\frac{r}{12}\right)}^{12n}-1}$

Determine the monthly payment of a 30-year $450,000 mortgage with interest rate of 4.2% (r =0.042). Define the variables P, r, and n and then use them in the formula to calculate M.