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)
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)
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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?
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Expert Solution
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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)
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