Answer to Question #252464 in Financial Math for Emmanuel

Question

Brendan & Kelly purchased an item valued at $147,000. They paid $22,050 down and financed the rest at 2.8% compounded annually. To reduce the amount owing to $32,490 at the end of 3 years, what size of equal payments must Brendan & Kelly make at the end of each three months?

Enter the present value as a positive value in the PV box below.

Enter PMT and FV as positive or negative values based on PV being positive.

Report PMT accurate to the nearest cent.

P/Y =

C/Y =

N =

I/Y =

PV =

PMT =

FV=

The size of each equal payment is

(enter a positive value) $  .__________________

Answer 1

In Annuities for loan, sometimes there is difference between compounding period (C/Y) and payment number (P/Y) which requires an analyst compute effective rates. It can also be enacted in calculation by using TVM solvers by entering differential values.

The values will be entered as below:

Hence, the size of payment is $8,281.43

Working Notes (for excel):