Question

3 1 point 1 What is the amortization formula Heather will use to determine her payment amount? O A = 5000 .03958(1.03958) (1.03958) S-1 A = 5000 0475(1.0475) 15 (1.0475] 13 A = 5000 003958(1.003958)! (1.003958)8-1 4 1 Pot What would Heather's monthly payment be?

Answer 1

The amortization formula is given by

`A=P(r(1+r)^n)/((1+r)^n-1)`
`\begin{gathered} \text{ where } \\ A=\text{ payment amount per period} \\ P=\text{ Loan amount (initial principal)} \\ r=\text{ interest rate per period} \\ n=\text{ total number of payments or periods} \end{gathered}`

In this case,

P = $5000,

r = 4.75% / 12 = 19 / 48 % = 0.003958

n=18

Therefore

`A=5000(0.003958(1.003958)^(18))/((1.003958)^(18)-1)=`