Question

Use P=PV(i1−(1+i)−n)

to determine the monthly payment for a $60,000 loan compounded monthly for 5 years at a 4.0%.

Answer 1

$1,111.88

Explanation:

To calculate the monthly payment for a $60,000 loan compounded monthly for 5 years at a 4.0% interest rate, we can use the formula:

P = PV(i / (1 - (1 + i)^(-n)))

where:

P = monthly payment

PV = present value or loan amount

i = interest rate per period

n = total number of periods

In this case, the loan amount is $60,000, the interest rate per period is 4.0% / 12 = 0.00333, and the total number of periods is 5 years x 12 months/year = 60 months.

Substituting these values into the formula, we get:

P = 60000(0.00333 / (1 - (1 + 0.00333)^(-60)))

P = $1,111.88 (rounded to the nearest cent)

Therefore, the monthly payment for a $60,000 loan compounded monthly for 5 years at a 4.0% interest rate is $1,111.88.