Further 3/4 Financial Maths Exam Question

[sam777]

Hi,

I am having trouble understanding both what this question is asking (attached below) and how to solve it. Would appreciate some assistance.

[Golgi Apparatus]

Hi,
This is a finance solver question. It is asking how much you have to pay each payment (with quarterly payments) for the loan to be fully repaid in exactly 20 years, if each payment is the same amount.
I’ve included the finance solver entries, but see if you can work it out first

Hints

N: 20 years x 4 payments per year
I: in the question
PV: in the question
PMT: ?
FV: what do you want the balance of the loan to be in the future?
P/Y: how many payments per year?
C/Y: how often does it compound?

Finance solver entries

N: 80
I: 7.25
PV: 300000 (positive as the bank gives you $300000)
PMT: ?
FV: 0 (as the loan is fully repaid)
P/Y: 4
C/Y: 4

Answer

PMT: -7132.417812
You pay the bank $7132.42 each quarterly payment
So the answer (I think!) is D

I hope this helps, let me know if you have any questions!