Question

Using technology, determine the quarterly payment on a 4 year loan of $16,231 at 5.1% compounded quarterly. round your answer to the nearest cent. a. $1,125.69 c. $1,518.85 b. $1,127.86 d. $1,508.31

Answer 1

The quarterly payment will be $1,127.86

What is compound interest?

Compound interest is the interest on a loan or deposit that  levied on both the first principal and the collected interest from past periods.

The amortization formula is ...

$A=\dfrac{P\timesr}{(1-(1+r)^{-n}}$

where A is the payment amount, P is the principal amount, r is the interest rate per period, and n is the number of periods.

Here, we have

P=$16,231, r=0.051/4=0.01275, n=4·4=16.

So, the payment is ...

$A=\dfrac{16231\times 0.01275}{1-(1.01275)^{-16}}$  

$A= 1127.86$

Hence the quarterly payment amount is $1,127.86.

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