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If you can obtain bank financing at 6.81% APR (monthly compounding), what would be the implied monthly loan payments?

User Papirrin
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1 Answer

5 votes

Answer:

Question is not complete so let us assume the following to complete it

Loan Amount = $ 100,000

Loan term = 2 years.

Solution:

This problem requires us to calculate the monthly loan payment. Monthly compounding rate is given in problem. So we can easily calculate monthly loan payment using formula given below.

Loan PV = Installment (A.F)

So putting values in fomula

100,000 = Installment ((1-(1+6.81/12)^-24)/6.81/12))

Installment = 100,000/22.38

Installment = $ 4,468 (monthly loan payments)

User Raul Guiu
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