Loan Calculation (Payment)

Question

A loan of $4,700 at 6.60% is to be repaid by three equal payments due four, six, and eight months after the date on which the money was advanced.



Calculate the amount of each payment. Use the loan date as the focal date. (Do not round intermediate calculations and round your final answer to 2 decimal places.)

Answer 1

4700 = X/(1+0.066)⁴ + X/(1+0.066)⁶ + X/(1+0.066)⁸

with X = equal payments.

Therefore factor out X and get:

4700 = X * (1.066^-4 + 1.066^-6 + 1.066^-8) = X * 2.0556...

Divide both sides by 2.055...

X = 4700/2.055... = 2286.428567...

Round to two decimal places to get $2286.43