Question

A group of private investors purchased a condominium complex for $4 million. They made an initial down payment of 12% and obtained financing for the balance. If the loan is to be amortized over 12 years at an interest rate of 6.6%/year compounded quarterly, find the required quarterly payment. (Round your answer to the nearest cent.)

Answer #1

Loan amount = cost of condominium - down payment

Loan amount = $4,000,000 - ($4,000,000 * 12%) = $3,520,000

Quarterly loan payment is calculated using PMT function in Excel :

rate = 6.6% / 4 (converting annual rate into quarterly rate)

nper = 12*4 (12 year loan with 4 quarterly payments each year)

pv = 3520000 (loan amount)

PMT is calculated to be $106,740.15

Quarterly loan payment is $106,740.15

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