Question

Find the payment necessary to amortize the following loan. ​$7400, 8.6% ​ semiannually; 36 semiannual payments

The payment is$?

Answer 1

Answer:

Given,

To determine the payment

consider,

Loan payment = (loan amount*rate of interest) / {1 - (1 + Interest rate)^{number of payments}}

Semi-annual rate of interest = 8.6%/2

= 4.3%

Now substitute in loan payment

Loan payment = ($7,400 * 0.043) / (1 - 1.043^-36)

Payment = $407.8