What is the monthly payment that should occur when $35,000 is borrowed at 8% per year...
What is the monthly payment that should occur when $35,000 is borrowed at 8% per year compounded quarterly and the loan is repaid with 60 equal monthly payments? Explain, using a TI-84.
Please i need a well explained answer on this. Show Working.
Homework Answers
Ans:
For computing the monthly payment using TI-84 following steps needed
Step#1: Press - Apps, Finance, TVM solver
Step#2: Enter all the information except PMT as follows
| N= total no of payments we have to make throughout the loan period | 60 | |
| I%= Interest rate | 8 | |
| PV= Present value of the loan | 35000 | |
| PMT= Monthly Payment | ||
| FV=Future value | 0 | Because we repaying the loan fully hence the future value of the loan is nill |
| P/Y= no of payments per year | 12 | Since we are paying monthly |
| C/Y= compounds per year | 4 | since compounded quarterly similarly if compounded monthly we have to put value 12 |
Step#3:
After putting all the value go to the PMT value Press Clear, Alpha, Enter
The value comes negative because this is a cash outflow amount since we are paying.
now you got the answer
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