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Find the payment necessary to amortize a 4% loan of $700 compounded quarterly, with 10 quarterly payments. The payment size is $ (Round to the nearest cent.)

User DraganB
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1 Answer

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Final answer:

The payment necessary to amortize a 4% loan of $700 compounded quarterly, with 10 quarterly payments, is $68.70 (rounded to the nearest cent).

Step-by-step explanation:

To amortize a loan, we need to find the monthly payment. The formula to calculate the monthly payment for an amortizing loan is:

Monthly Payment = Principal * (Rate / (1 - (1 + Rate) ^ -n))

In this case, the principal is $700, the interest rate is 4% (0.04), and the loan is compounded quarterly with 10 quarterly payments. The formula becomes:

Monthly Payment = 700 * (0.04 / (1 - (1 + 0.04) ^ -10))

Calculating the value gives us a monthly payment of $68.70. Therefore, the payment necessary to amortize the loan is $68.70 (rounded to the nearest cent).

User Rickard Nilsson
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