Find the payment necessary to amortize a 4% loan of $900.00 compounded quarterly , with 11 quarterly payments?
To find the payment necessary to amortize a loan, we can use the formula for the periodic payment amount of an amortizing loan. The formula is:
P = (r * A) / (1 - (1 + r)^(-n))
Where:
P is the periodic payment amount,
r is the interest rate per period,
A is the loan amount, and
n is the number of periods.
In this case:
r = 4% per quarter = 0.04/4 = 0.01,
A = $900.00, and
n = 11 quarterly payments.
Substituting these values into the formula, we get:
P = (0.01 * $900.00) / (1 - (1 + 0.01)^(-11))
Let's calculate this.