Question

Straight bank loan. Left Bank has a standing rate of 7.5% (APR) for all bank loans and requires monthly payments. What is the monthly payment if a loan is for (a) $100,000 for 4 years, (b) $295,000 for 8 years, or (c) $1,500,000 for 23 years? What is the effective annual rate of each of these loans? (a) What is the monthly payment if a loan is for $100,000 for 4 years? $ (Round to the nearest cent.)

Answer 1

a.

Calculating Monthly Payment,

Using TVM Calculation,

PMT = [PV = 100,000, FV = 0, I = 0.075/12, N = 48]

PMT = $2,417.89

b.

Calculating Monthly Payment,

Using TVM Calculation,

PMT = [PV = 295,000, FV = 0, I = 0.075/12, N = 96]

PMT = $4,095.74

c.

Calculating Monthly Payment,

Using TVM Calculation,

PMT = [PV = 1,500,000, FV = 0, I = 0.075/12, N = 276]

PMT = $11,420.84