RUBEN B. answered • 05/22/20

Former Teacher and MS Finance Top Graduate

Hi, so here are the givens in the problem.

interest rate = 8.6%/12 ----> Interest rate is given annualized you must divide by the period which is monthly

Months = 4 * 12 ---> total number of periods 4 years

Present value of loan = 18000

FV = 0 because you are paying this down

Solve for payment gives you 444.5192

this can be solved with a financial calculator or excel pretty easily

or you can do it by plugging into the formula which is more work.

18000 * (.086/12) = (pmt)*(1-(1/(1+(.086/12))^48