Question

Ben is considering purchasing a new home. His banker has presented a 10-year mortgage at a fixed rate of 7.6%. The cost of the home is $196000 and Ben will be required to provide a 25% down

payment. If we use Sheets to determine his monthly payment, which of the following Sheets commands could be used to determine his payment? (Choose all that apply!)
-PMT(0.076/12,120,-147000)
PMT(0.076/12,10 12,-$147000)
PMT(7.6,10,-196000)
PMT (7.6% / 12,12 10,-147000)
PMT(7.6/12,12 10,-147000)
-PMT(0.076/12,120,-196000+49000)

Answer 1

Answer: The PMT function in Sheets is used to calculate the monthly payment for a loan. The syntax of the function is PMT(rate, nper, pv, [fv], [type]).

Rate: the interest rate per period

Nper: the total number of payments

Pv: the present value (the total amount of the loan)

Fv: the future value of the loan (optional)

Type: the number 0 or 1 indicating when payments are due (0 = end of period, 1 = beginning of period)

Given the information in the problem, Ben's mortgage is for 10 years, so the total number of payments is 10*12 = 120. The present value of the loan is $196000 and the down payment is 25% of the home's cost so 25%*196000 = $49000. Therefore, the present value of the loan is $196000 - $49000 = $147000

Based on this information, the following commands would be used to determine the monthly payment:

PMT(0.076/12,120,-$147000)

PMT(0.076/12,120,-196000+$49000)

The first command uses the annual interest rate divided by 12 to convert it to a monthly rate, and the total number of payments is 120 (10 years * 12 months/year). The second command also uses the same monthly rate and total payments and the present value which is $147000

The other commands

Explanation: