If you had to amortise a $120,000 loan over a 10-year period into a payment stream...

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If you had to amortise a $120,000 loan over a 10-year period into a payment stream...

If you had to amortise a $120,000 loan over a 10-year period into a payment stream that looks like a uniform annuity flow taking the time value of money into account, then the value of the monthly payments at an APR of 9% on the loan must be how much? (round to the nearest whole dollar)

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Answer 1

Answer #1

Information provided:

Present value= $120,000

Time= 10 years*12= 120 months

Monthly interest rate= 9%/12= 0.75%

The monthly payment is calculated by entering the below in a financial calculator:

PV= -120,000

N= 120

I/Y= 0.75

Press the CPT key and PMT to compute the amount of monthly payment.

The value obtained is 1,520.11.

Therefore, the amount of monthly payment is $1,520.11.

In case of any query, kindly comment on the solution.

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Answer 2

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