16
QuizMultiple Choice

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Question 16 • FT GMS AMDM B IC – 72

Using technology, determine the semi-annual payment on a 6 year loan of $19,264 at 7.2% compounded semi-annually. Round you answer to the nearest cent.

Answer
A
$2,468.16
B
$2,451.29
C
$1,997.91
D
$2,005.26

Explanation

There are 12 semi-annual payments in 6 years, and the interest rate per period is 7.2% ÷ 2 = 3.6%. Using the present-value formula for a loan payment, payment = 19,264(0.036) ÷ [1 − (1.036)^−12] ≈ $2,005.26. The semi-annual payment is therefore $2,005.26, choice d.

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