Determine the periodic payment for a loan of $200,000 borrowed at 3% for 15 years, with monthly payments. Round your answer to the nearest cent.
A)$1,404.69
B) $1,438.51
C) $1,381.16
D) $1,368.68
E) $1,373.68

Question

Determine the periodic payment for a loan of $200,000 borrowed at 3% for 15 years, with monthly payments. Round your answer to the nearest cent. ​
A)$1,404.69
B) $1,438.51
C) $1,381.16
D) $1,368.68
E) $1,373.68

Quizplus · Accepted Answer

The periodic payment can be calculated using the formula for an amortizing loan: P = [r*PV] / [1 - (1 + r)^-n], where P is the monthly payment, r is the monthly interest rate (annual rate/12), PV is the present value or loan amount, and n is the total number of payments. For this loan, r = 0.03/12, PV = $200,000, and n = 15*12. Plugging these values into the formula gives a monthly payment of approximately $1,381.16.

Determine the Periodic Payment for a Loan of $200,000 Borrowed