The monthly payment for the installment loan of $400,000 at 10% for 20 years is <u>$3,860.09</u>.
<h3>What are periodic payments?</h3>
Periodic payments are payments of a fixed amount at regular intervals (for example, weekly, monthly, quarterly, or yearly).
Periodic payments are usually used to repay a mortgage and other loans. Included within the periodic payments are the principal and interest portions of the loan.
<h3>Question Completion:</h3>
Amount Financed (P) = $400,000
Annual Percentage Rate (r) = 10%
Number of Payments per Year (n) = 12
Time in Years (t) = 20 years
N (# of periods) = 240 months (12 x 20 years)
I/Y (Interest per year) = 10%PV (Present Value) = $400,000
FV (Future Value) = $0
<u>Results</u>:
PMT = $3,860.09
Sum of all periodic payments = $926,421.60 ($3,860.09)
Total Interest $526,421.60 ($926,421.60 - $400,000)
Thus, the monthly payment for the installment loan is <u>$3,860.09</u>.
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