Question

Mark borrowed $5,500 at 11.5 percent for five years. What is his monthly payment?

A. $131.50

B. $173.50

C. $120.95

D. $150.22

Answer 1

Use the formula of the present value of an annuity ordinary which is
Pv=pmt [(1-(1+r/k)^(-kn))÷(r/k)]
Pv present value 5500
PMT monthly payment?
R interest rate 0.115
K compounded monthly 12
N time 5years
Solve the formula for PMT
PMT=Pv÷ [(1-(1+r/k)^(-kn))÷(r/k)]
PMT=5,500÷((1−(1+0.115÷12)^(
−12×5))÷(0.115÷12))
=120.95

So the answer is C

Hope it helps!

Answer 2

C option is correct

Explanation:

Given: payment borrowed (P)= $5,500

rate (r)=11.5 or 0.115

Time(t)= 5 years

Compound monthly(k)=12

To find : Monthly payment (M)

Formula used :
`M= P/((1-(1+(r)/(k))^(-kn))/((r)/(k)))`

Solution :
`M= 5500/((1-(1+(0.115)/(12))^(-60))/((0.115)/(12)))`

by solving we get, M =$120.95

therefore, option C is correct