Answer:
$1,989.53 monthly payment
See figure to view the entries and formula in Excel
Step-by-step explanation:
The PMT formula in Excel is used to calculate the monthly payment on a loan amount at a specific interest rate spread over a period of time in years
The most basic format of the function is
=PMT(rate, nper, pv)
The things to watch out for are:
rate = annual interest rate /12
nper = number of periods = 12 x number of years
pv = Present Value which is the loan amount
Given
PV = $181,000
rate = 5.78%
number of years = 10 years we get
Monthly Payment = PMT(0.0578/12, 12 * 10, 181000)
Of course in Excel we would use cell references rather than actual values to compute the payment
See figure for the way the formula is used. The formula bar contains the arguments
The formula in cell B6 is =PMT(B3/12, B4*12,B2)
The answer works out to $1,989.53 monthly payment
