Question

Joe secured a loan of $15,000 two years ago from a bank for use toward his college expenses. The bank charges interest at the rate of 4%/year compounded monthly on his loan. Now that he has graduated from college, Joe wishes to repay the loan by amortizing it through monthly payments over 13 years at the same interest rate. Find the size of the monthly payments he will be required to make. (Round your answer to the nearest cent.)

Answer 1

131

Step-by-step explanation:

Answer 2

Answer: $131.29

Step-by-step explanation:

Given data:

loan amount = $15,000

duration for loan = 2 year

rate of interest = 4%

period for loan payment 13 year

Loan Amount Grew To:
`15,000(1+.04/12)^(12*2)=$16247.14`

Amortization Formula:

`PMT = PV [(r/m)/(1-(1+r/m)^(-mt)`

PV = $16247.14

r = .04

m = 13

t = 12

so

PMT =
`16247.14* [((.04/13))/((1-(1+(.04)/(13^(-13*12)))]`

PMT = $130.65

Answer: $131.29