Question

Find the periodic payment R required to amortize a loan of P dollars over t years with interest charged at the rate of r%/year compounded m times a year. (

Answer 1

$444

Step-by-step explanation:

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The period payment is the installment amount required to be paid on the loan. Installments are made after different periods for different loans in a year. Some instalments may be paid once or twice during the year. These instalments comprise the interest charge and the repayment of the principle until the loan matures (the future value becomes $0).

So given the data as :

Principal (PV) = $30,000

Interest (I/YR) = 4 %

Period per year (P/YR) = 6

Total Periods (N) = 15 × 6 = 90

Future Value (FV) = $ 0

Payment (PMT) = ?

Inputting the data in a financial calculator as : (PV) = $30,000, (I/YR) = 4 %, (P/YR) = 6, (N) = 15 × 6 = 90 and (FV) = $ 0 we can solve PMT as $444

Conclusion ;

Periodic payment R required to amortize a loan is $444