Question

Using technology, determine the quarterly payment on a 4 year loan of $16,231 at 5.1% compounded quarterly. Round your answer to the nearest cent.

Answer 1

Letter B

Explanation:

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Answer 2

$1,127.86

Explanation:

The amortization formula is ...

A = Pr/(1 -(1+r)^-n)

where A is the payment amount, P is the principal amount, r is the interest rate per period, and n is the number of periods.

Here, we have P=$16,231, r=0.051/4=0.01275, n=4·4=16.

So, the payment is ...

A = $16,231·0.01275/(1 -1.01275^-16) = $1,127.86

The quarterly payment amount is $1,127.86.