Question

If a cell in an Excel spreadsheet uses the following formula to determine the monthly payment for a loan:

=PMT(0.062/12, 12*15,-150000)
What is the Annual Percentage Rate for the loan?

%

How many payments will the borrower make total?

Answer 1

The APR for the loan is 6.2%, and there will be a total of 180 payments made by the borrower.

Step-by-step explanation:

The formula =PMT(0.062/12, 12*15,-150000) in an Excel spreadsheet is used to calculate the monthly payment for a loan. The parts of the formula represent the interest rate, the total number of payments, and the loan amount, respectively.

In this formula:

• 0.062/12 indicates the monthly interest rate, which means the Annual Percentage Rate (APR) of the loan is 6.2%.
• 12*15 represents the total number of monthly payments over the life of the loan, which is 180 payments (12 months multiplied by 15 years).

Therefore, the APR for the loan is 6.2%, and the borrower will make a total of 180 payments.