A credit union entered a lease contract valued at $7300

Finance Dec 09, 2020

A credit union entered a lease contract valued at $7300. The contract provides for payments at the end of each quarter for 5 years. If interest is 4.2% compounded quarterly, what is the size of the quarterly payment?
The payment is $
I I
(Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as needed.)

Expert Solution

Computation of Size of Quarterly Payment using PMT FUnction in Excel:

=pmt(rate,nper,-pv,fv)

Here,

PMT = Size of Quarterly Payment = ?

Rate = 4.2%/4 = 1.05%

Nper = 5 years * 4 = 20 Periods

PV = $7,300

FV = 0

Substituting the values in formula:

=pmt(1.05%,20,-7300,0)

PMT = Size of Quarterly Payment = $406.57

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