Answered: Which of the following calculates the…

Computer Networking: A Top-Down Approach (7th Edition)

7th Edition

ISBN:9780133594140

Author:James Kurose, Keith Ross

Publisher:James Kurose, Keith Ross

Chapter1: Computer Networks And The Internet

Section: Chapter Questions

Problem R1RQ: What is the difference between a host and an end system? List several different types of end...

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Question

Which of the following calculates the monthly payment (expressed as a positive number) for a loan of $10,000 for 2 years with a 3.5% annual interest rate?

a. –Financial.Pmt(0.035, 2, 10000)

b. –Financial.Pmt(0.035 / 12, 2 * 12, 10000)

c. –Financial.Pmt(2 * 12, 0.035 / 12, 10000)

d. –Financial.Pmt(10000, 0.035 / 12, 2 * 12)

Expert Solution

Explanation

1) Financial.Pmt function returns value the payment for an annuity based on periodic, fixed payments and a fixed interest rate

2) Its syntax is Financial.Pmt(rate, nper, pv, [fv], [type]), where

rate: The interest rate per period. If you get a loan at an annual percentage rate of 10 percent and make monthly payments, the rate per period is 0.1/12
nper: The total number of payment periods in the annuity. If you make monthly payments on a four-year, your loan has a total of 4 × 12 payment periods.
pv: The present value loan
[fv], [type] is optional parameter

3) We have annual interest at 3.5%, so rate = 0.035/12

4) We have 2 years so nper = 2*12

5) We have loan amount $10,000, so pv = 10000

6) So correct option to calculate calculates the monthly payment is Financial.Pmt(0.035 / 12, 2 * 12, 10000)