Question

A total of $51,000 is borrowed and repaid with 60 monthly payments, with the first payment occurring 1 month after receipt of the $51,000. The stated interest rate is 8% compounded monthly. What monthly payment should be made?

Answer 1

To find the monthly payment, use the formula for the monthly payment of a loan: PMT = PV × i ÷ (1 - (1 + i)¯n). By substituting the values into the formula, the monthly payment is $1,064.58.

Step-by-step explanation:

To find the monthly payment, we can use the formula for the monthly payment of a loan:

PMT = PV × i ÷ (1 - (1 + i) ¯^n)

By substituting the values into the formula, we can calculate the monthly payment:

PMT = $51,000 × (0.08/12) ÷ (1 - (1 + (0.08/12)) ¯^60)

PMT = $1,064.58

Therefore, the monthly payment that should be made is $1,064.58.