27
QuizMultiple Choice

Amortization

Question 27 • FT GMS AMDM B IC – 72

Using technology, determine the monthly payment on a 35 month loan of $28,000 at 8.1% compounded monthly. Round you answer to the nearest cent.

Answer
A
$900.90
B
$875.02
C
$1,102.94
D
$1,012.10

Explanation

The monthly interest rate is 8.1% ÷ 12 = 0.675%, or 0.00675, and the loan lasts 35 months. Using the loan-payment formula, payment = 28,000(0.00675) ÷ [1 − (1.00675)^−35] ≈ $900.90 per month. The best answer is choice a, $900.90.

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