Question

Determine the periodic payments PMT on the given loan or mortgage. (Round your answer to the nearest cent.)

$80,000 borrowed at 5% for 9 years, with monthly payments
PMT = $

Answer 1

The periodic payment (PMT) on the given loan or mortgage is approximately $978.88.

To determine the periodic payments (PMT) on the given loan or mortgage, we can use the formula for calculating the monthly payment on a loan.

The formula is:


`PMT = (P * r * (1+r)^n) / ((1+r)^n - 1)\\`
where:
P = Principal amount (the amount borrowed) = $80,000
r = Monthly interest rate = Annual interest rate / 12
n = Total number of payments = 9 years * 12 months/year

First, let's calculate the monthly interest rate. The annual interest rate is given as 5%. We need to divide it by 100 to convert it to a decimal and then divide it by 12 to get the monthly interest rate.

Monthly interest rate = (5 / 100) / 12 = 0.0041667 (approximately)

Next, let's calculate the total number of payments.

Total number of payments = 9 years * 12 months/year = 108 months

Now, we can substitute the values into the formula and calculate the PMT.

PMT = (80000 * 0.0041667 * (1+0.0041667)^108) / ((1+0.0041667)^108 - 1)

Calculating this expression will give us the value of PMT.

PMT ≈ $978.88

Answer 2

The periodic payments PMT on the given loan or mortgage is $922.93.

The PMT means payment which are regular and typically fixed amounts of money paid or received in a loan or investment.

The formula of PMT to use to solve the periodic payments is:
`PMT = P * (r)/((1 - (1+r)^(-n))`.

P = 80000

i = 5%

r = 5%/12 = 0.0042

n = 9 * 12 = 108

PMT = 80,000 * 0.0042 / (1 - (1+0.0042)^-108

PMT = 80,000 * 0.0042 / 0.36405938891

PMT = 80,000 * 0.01153657927

PMT = 922.9263416

PMT = $922.93.