We know the following two commands in Excel:PMT(rate, nper, PV, FV)FV(rate, nper, pmt, PV)Which of the following Excel commands gives the monthly payment on a business loan originally of 100,000 Peruvian Sols with a down payment of 4500 sols. The loan was a 10-year loan with an annual interest rate of 4.2%.Group of answer choices=FV(4.2/12,120,-4500,-95500)=PMT(4.2/12,120,0,-95500)=PMT(0.042/12,10,-95500,-4500)=PMT(0.042/12,120,-95500,0)=FV(0.042/12,10,-95500,-4500)
Question
We know the following two commands in Excel:PMT(rate, nper, PV, FV)FV(rate, nper, pmt, PV)Which of the following Excel commands gives the monthly payment on a business loan originally of 100,000 Peruvian Sols with a down payment of 4500 sols. The loan was a 10-year loan with an annual interest rate of 4.2%.Group of answer choices=FV(4.2/12,120,-4500,-95500)=PMT(4.2/12,120,0,-95500)=PMT(0.042/12,10,-95500,-4500)=PMT(0.042/12,120,-95500,0)=FV(0.042/12,10,-95500,-4500)
Solution
The correct Excel command to calculate the monthly payment on a business loan originally of 100,000 Peruvian Sols with a down payment of 4500 sols, a 10-year loan with an annual interest rate of 4.2% is:
=PMT(0.042/12,120,-95500,0)
Here's the breakdown:
- The rate is the annual interest rate divided by 12 to get the monthly rate, which is 0.042/12.
- The nper is the number of periods, which is 10 years times 12 months, equaling 120.
- The PV is the present value of the loan, which is the original loan amount minus the down payment, equaling -95500 (it's negative because it represents an outgoing payment).
- The FV is the future value of the loan, which is 0 because the goal is to fully pay off the loan.
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