Question

What is the weekly payment on a $100,000, 3 year loan with a fixed rate of 4% compounded quarterly?

Answer 1

A	B	C	D	E	F	G	H	I	J
2
3		Since the cash flow is annual and the compounding is quarterly, therefore
4		equivalent annual rate needs to be calculated as follows:
5
6		APR	4.00%
7		m	4	(for quarterly compounding)
8
9		Effective annual rate	=((1+APR/m)^m)-1
10			4.06%	=((1+D12/D13)^D13)-1
11
12		Hence effective annual rate is	4.06%
13
14		Calculation of Weekly Payment:
15
16		Weekly payment can be calculated using PMT(RATE,NPER,PV,FV,TYPE) function in Excel as follows:
17
18		Given the following data:
19		Loan taken	$100,000
20		Duration of mortgage	3	Years
21		Interest rate	4.06%
22
23		Weekly Payment can be calculated as below:
24		RATE (Weekly interst rate):	0.08%	=D21/52
25		NPER (No of Weeks):	156	=D20*52
26		PV (Loan Amount):	-$100,000	=-D19
27		FV	0
28		TYPE	0
29		weekly Payment	$681.11	=PMT(D24,D25,D26,D27,D28)
30
31		Hence Weekly Payment is	$681.11
32