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Determine the periodic payments on the given loan or mortgage
Determine the periodic payments on the given loan or mortgage. HINT [See Example 5.] (Round your answer to the nearest cent.)
$1,000,000 borrowed at 8% for 15 years, with quarterly payments
Expert Solution
Number of periods = 15 * 4 = 60
quarterly rate = 8% / 4 = 2%
Present value = Annuity *[1 - 1 / (1 + rate)^periods] / rate
1,000,000 = Annuity *[1 - 1 / (1 + 0.02)^60] / 0.02
1,000,000 = Annuity *[1 - 0.30478] / 0.02
1,000,000 = Annuity * 34.76089
Annuity = $28,767.97
quarterly payments will be $28,767.97.
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