Problema Solution
Using technology, determine the quarterly payment on a 4 year loan of $16,231 at 5.1% compounded quarterly. Round your answer to the nearest cent.
a.
$1,125.69
c.
$1,518.85
b.
$1,127.86
d.
$1,508.31
Answer provided by our tutors
We will use the Sinking Fund Payment formula:
R = S*i/((1 + i)^n - 1)
where
R = the periodic payment;
S = the future value;
i = interest rate per period;
n = the number of periods.
In our problem we have:
S = $16,231
n = 4*4 = 16 periods
i = 0.051/4
R = 16231*(0.051/4)/((1 + 0.051/4)^16 - 1)
R = $920.91
The quarterly payment is $920.91.