Final answer:
The PMT function in Excel calculates the monthly loan payment based on an annual interest rate, the total number of years of the loan, and the loan amount. To keep references to the interest rate and loan term constant when copying the formula, absolute references ($B$5 for interest rate and $B$6 for years) are used, and the loan amount (PV) should be entered as a negative value to return a positive monthly payment.
Step-by-step explanation:
The student is required to use the PMT function in Excel to calculate the monthly payment of a loan. The PMT function is used to determine the payment for a loan based on constant payments and a constant interest rate. An example for entering the PMT function in cell C9 would look something like this:
=PMT($B$5/12, $B$6*12, -PV)
where:
$B$5 is the annual interest rate (expressed as a decimal),
$B$6 is the total number of years of the loan term, and
PV (which is not absolutely referenced in the question) is the present value or the total amount of the loan. In this example, both the interest rate and loan term are written as absolute references to ensure that copying the formula to another cell does not change these references.To return a positive value, the present value (PV) of the loan should be input as a negative number since the cash flow is outgoing. This is a standard convention in financial calculations where positive numbers represent income and negative numbers represent payments.