The screenshot is a demonstration using pmt function to show the monthly (periodically) mortgage payment with the loan amount, under different annual interest rate and the duration (years) of the loan. The definition of the pmt funtion is pmt(rate, nper, pv). Assume that you enter a single formula in B7, then you replicate (copy and paste) the formula from B7 to C7:J7, then replicate the entire row, B7:J7, to B15:J15. Now, the view of the formula in cell J15 is the following:

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The image illustrates a table displaying the monthly mortgage payments for a $500,000 loan under different interest rates and loan durations using the PMT function. The following parameters are outlined:

- **Loan Amount**: $500,000.00
- **Annual Frequency**: 12 (monthly payments)
- **Interest Increment**: 0.125%
- **Duration Increment**: 5 years

### Table Explanation

The table shows the annual interest rates across columns (5.000% to 6.000%) and the loan duration in years down the rows (10 to 50 years, increasing in five-year increments). Each cell within the table represents the calculated monthly payment using the PMT function for the specified interest rate and duration.

For example:
- At 5.000% interest for 10 years, the monthly payment would be ($5,303.28).
- At 6.000% interest for 50 years, the monthly payment would be ($2,632.02).

### PMT Function Explanation

The PMT function is used to calculate mortgage payments, with the syntax `pmt(rate, nper, pv)` where:
- `rate` is the interest rate for each period.
- `nper` is the total number of payments.
- `pv` is the loan amount (present value).

The formula is applied in cell B7 and replicated across the rows and columns. The formula in cell J15 is given as one of the following:

- =PMT(J$6/$B$2,$A15*$B$2,$B$1)
- =PMT(J6/$B2,$A15*$B2,$B$1)
- =PMT(J6/B2,A15*B2,B1)
- =PMT($J$6/$B$2,$A15*$B$2,$B$1)

The choice of formula encapsulates the application of the interest rate, payment frequency, and total loan duration to calculate the monthly payments.

### Diagram Description

The table serves as a visual representation to help learners understand how changing the interest rates and loan durations impact monthly payments, providing practical insight into loan management.
Transcribed Image Text:The image illustrates a table displaying the monthly mortgage payments for a $500,000 loan under different interest rates and loan durations using the PMT function. The following parameters are outlined: - **Loan Amount**: $500,000.00 - **Annual Frequency**: 12 (monthly payments) - **Interest Increment**: 0.125% - **Duration Increment**: 5 years ### Table Explanation The table shows the annual interest rates across columns (5.000% to 6.000%) and the loan duration in years down the rows (10 to 50 years, increasing in five-year increments). Each cell within the table represents the calculated monthly payment using the PMT function for the specified interest rate and duration. For example: - At 5.000% interest for 10 years, the monthly payment would be ($5,303.28). - At 6.000% interest for 50 years, the monthly payment would be ($2,632.02). ### PMT Function Explanation The PMT function is used to calculate mortgage payments, with the syntax `pmt(rate, nper, pv)` where: - `rate` is the interest rate for each period. - `nper` is the total number of payments. - `pv` is the loan amount (present value). The formula is applied in cell B7 and replicated across the rows and columns. The formula in cell J15 is given as one of the following: - =PMT(J$6/$B$2,$A15*$B$2,$B$1) - =PMT(J6/$B2,$A15*$B2,$B$1) - =PMT(J6/B2,A15*B2,B1) - =PMT($J$6/$B$2,$A15*$B$2,$B$1) The choice of formula encapsulates the application of the interest rate, payment frequency, and total loan duration to calculate the monthly payments. ### Diagram Description The table serves as a visual representation to help learners understand how changing the interest rates and loan durations impact monthly payments, providing practical insight into loan management.
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