A contract can be fulfilled by making an immediate payment of $11,600 or equal payments at the end of each month for 4 years

Finance Dec 25, 2020

A contract can be fulfilled by making an immediate payment of $11,600 or equal payments at the end of each month for 4 years. What is the size of the monthly payments at 11.2% compounded monthly? The payment is $0 (Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as needed.)

Expert Solution

Use PMT function in EXCEL to find the monthly payment

=PMT(rate,nper,pmt,pv,fv,type)

rate=11.2%/12=0.9333%

nper=4 years*12=48 months

pv=present worth=11600

fv=0

type=0 (payments at the end of each month)

=PMT(0.9333%,48,-11600,0,0)=300.94

Monthly payment=$300.94

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