Question

Niles needs 19,000 to purchase a new car. Niles borrows from his pension plan to pay off the loan because the pension plan loan interest rate is 6% nominal annual rate of interest compounded monthly. The loan payments are to be made at the end of each month. To pay off this loan he will make n payments of 472.82 and an additional smaller payment at the same time as the last 472.82 payment. What is the additional smaller payment (rounded to dollars)

Answer 1

$457.06

Step-by-step explanation:

Number of payments = NPER (I, -Pmt, Fv)

Number of payments= NPER (6%/12, -472.82 ,19000)

Number of payments = 44.97143014

After 44 payments, loan outstanding:

= FV (I, N, Pmt, Pv)

= FV (6%/12, 44, 472.82, -19000)

= $457.06

Hence, the additional smaller payment is $457.06