   Chapter 12, Problem 32AT ### Contemporary Mathematics for Busin...

8th Edition
Robert Brechner + 1 other
ISBN: 9781305585447

#### Solutions

Chapter
Section ### Contemporary Mathematics for Busin...

8th Edition
Robert Brechner + 1 other
ISBN: 9781305585447
Textbook Problem

# Amortization payment Loan Payment Time Nominal Present Value Payment Frequency Period (years) Rate (%) (Amount of Ix>an) 32. every month 4 13.5 $2,200 To determine To calculate: The amount of loan payment when payment frequency is 1 a month, the time duration in 4 years, the nominal rate of return is 13.5% and present value amount is$2,200.

Explanation

Given Information:

Payment frequency is 1 a month, the time duration in 4 years, the nominal rate of return is 13.5% and present value amount is $2,200. Formula used: The formula to compute the amortization payment is, Amortization payment=PV×i1(1+i)n Here PV is the present value, i is the interest rate per period (nominal rate ÷ periods per year) and n is the number of periods (years × periods per year). Calculation: Consider that payment frequency is 1 a month, the time duration in 4 years, the nominal rate of return is 13.5% and present value amount is$2,200.

The rate period is 1.125% or 0.01125(13.5%÷12 period per year).

The number of periods is 48(4 years×12 period per year)

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