Answer:
The equal monthly payment is $3,068.20
Explanation:
The equally monthly payments can be computed using the pmt formula in excel.
=pmt(rate,nper,pv,fv)
rate is the monthly nominal rate of 6%/12=0.5%
nper is the number of monthly payments required which is 4*12=48
pv is the current value of the bicycle of $170,000
fv is the worth balance of the financing arrangement at the end of fourth year that should be paid once ,$50,000 balloon payment
=pmt(0.5%,48,-170000,50000)
=$3,068.20
Note that the interest is one month interest rate as the payment is expected monthly.
Answer:
A loan payment calculator provides the information you need when deciding whether or not you can afford to borrow money.
In the above question, it's my job to see how much I need to pay my uncle if I borrowed $170,000 from him at an annual interest rate of 6%.
I'm supposed to payback monthly over the next 4 years.
Given the above, my monthly payment is computed as follows:
STEP I - Define Formula and Variables
Note firstly that the monthly payments are in instalments.
Formula:
(P x I) x ((1 + r)n)/ (t x ((1 + r)n)- 1)
P is the principal amount borrowed,
I is the annual interest rate,
r is the periodic monthly interest rate,
n is the total number of monthly payments, and t is the number of months in a year.
P: $170,000, the amount of the loan
r: 0.005 (6% annual rate—expressed as 0.06—divided by 12 monthly payments per year)
n: 48 (12 monthly payments per year times 4 years)
STEP II - Insert Variables
Inserting our given information we have:
= ($170,000 + ($170,000 x 4 x 0.005)) / (4 x 12)
STEP III - Simplify
Simplified further we have
= ($170,000+$3400)/48
= $173,400/48
= $3,612.5
So equal monthly payments would be equal to
= $3,612.5
Cheers!
