When using the Visual Basic .NET Financial.Pmt function, Financial.Pmt(Rate, NPer, PV[,FV, Due]), which of the following is correct for a 7%, $10,000, 5 year loan with monthly payments?
A) Financial.Pmt(.07, 5, 10000, 0, DueDate.EndOfPeriod)
B) Financial.Pmt(.07, 5, 10000, 0, DueDate.BegOfPeriod)
C) Financial.Pmt(.07/12, 5*12, 10000, 0, DueDate.EndOfPeriod)
D) Financial.Pmt(7, 5*12, 10000, 0, DueDate.EndOfPeriod)

Question

Quizplus · Accepted Answer

Since the loan has monthly payments, the interest rate must be adjusted to a monthly rate by dividing it by 12. The NPer argument must also be multiplied by 12 to represent the number of monthly payments over the 5-year term. The FV argument can be set to 0 since there is no balloon payment due at the end. DueDate.EndOfPeriod should also be used since it is assumed that payments are due at the end of each period.

When Using the Visual Basic