Find the periodic payment required to repay $12,330 over 15 years, with monthly payments at a 11% annual rate.Round to the nearest cent.
A) $\quad P = \$ 158.30$
B) $\quad P = \$ 140.14$
C) $\quad P = \$ 131.06$
D) $\quad P = \$ 167.38$
E) none of the above

Question

Find the periodic payment required to repay $12,330 over 15 years, with monthly payments at a 11% annual rate.Round to the nearest cent. 
A) $\quad P = \$ 158.30$
B) $\quad P = \$ 140.14$
C) $\quad P = \$ 131.06$
D) $\quad P = \$ 167.38$
E) none of the above

Quizplus · Accepted Answer

We can use the formula for monthly payments on a loan:

$P = \dfrac{r(PV)}{1-(1+r)^{-n}}$

where P is the monthly payment, r is the monthly interest rate (which is 0.11/12), PV is the present value (which is $12,330), and n is the total number of payments (which is 15*12 = 180).

Plugging in the numbers, we get:

$P = \dfrac{(0.11/12)(12330)}{1-(1+0.11/12)^{-180}}$

Simplifying this expression, we get:

$P = \dfrac{137.445}{1-0.288852} \approx \boxed{\$140.14}$

So the answer is B.

Find the Periodic Payment Required to Repay $12,330 Over 15 P=$158.30\quad P = \$ 158.30P=$158.30

Find the Periodic Payment Required to Repay $12,330 Over 15 $\quad P = \$ 158.30$