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Determine the periodic payments PMT on the given loan or

mortgage. (Round your answer to the nearest cent.) $400,000
borrowed at 5% for 7 years, with quarterly payments PMT = $

User RexBarker
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1 Answer

3 votes

Answer:r = (1 + 0.05/4)^(4/12) - 1 = 0.012308

n = 7 * 12 = 84

PMT = $5,559.91

Explanation: To calculate the periodic payments PMT on a loan or mortgage, you can use the formula for fixed monthly mortgage repayment calculation which is based on the annuity formula. The formula is mathematically represented as:

Fixed Monthly Mortgage Repayment Calculation = P * r * (1 + r)^n / [ (1 + r)^n – 1]

where P = Outstanding loan amount, r = Effective monthly interest rate, n = Total number of periods / months 1.

For the given loan of 400,000borrowedat5, we can calculate the effective monthly interest rate as follows:

r = (1 + 0.05/4)^(4/12) - 1 = 0.012308

n = 7 * 12 = 84

PMT = $5,559.91 2.

Therefore, the periodic payments PMT on the given loan or mortgage is $5,559.91.

User Tevin
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