SOLUTION: A debt of 1000 with interst at 16% compounded quaterly is to be amorized by 20 quarterly payments (all the same size) over the next 5 years. what will the size of these payments be
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Question 1076877: A debt of 1000 with interst at 16% compounded quaterly is to be amorized by 20 quarterly payments (all the same size) over the next 5 years. what will the size of these payments be? Answer by jorel1380(3719) (Show Source):
You can put this solution on YOUR website! The following formula is used to calculate the fixed monthly payment (P) required to fully amortize a loan of L dollars over a term of n months at a monthly interest rate of c. [If the quoted rate is 6%, for example, c is .06/12 or .005].
P = L[c(1 + c)^n]/[(1 + c)^n - 1]. So:
P=1000(.04(1+.04)^20)/((1+.04)^20 -1)
P=1000(0.07358175032862888443915456319312)
P=73.58175 as the value of quarterly payments. ☺☺☺☺
