For a $10,000 loan with an annual interest rate of 5% over 4 years, what is the monthly payment? (Use the amortization formula)*$234.63$300.45$250.12$276.25
Solution
To calculate the monthly payment for a loan, we can use the loan amortization formula:
P = [r*PV] / [1 - (1 + r)^-n]
Where: P = monthly payment r = monthly interest rate (annual rate / 12) PV = loan amount (present value) n = total number of payments (loan term in months)
Given in the problem: PV = $10,000 Annual interest rate = 5% (So, r = 5/100/12 = 0.004167) Loan term = 4 years (So, n = 4*12 = 48 months)
Substituting these values into the formula:
P = [0.004167 * 41.67 / [1 - 0.814508] P = 224.63
So, the monthly payment for a 224.63. However, this option is not available in the choices provided. There might be a mistake in the calculation or the options provided.
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