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Fatma decides to borrow O.R 12,000 from a bank for seven years at an annual interest...

Fatma decides to borrow O.R 12,000 from a bank for seven years at an annual interest rate of 11 %. Quarterly payments will be made until all the principal and the interest have been repaid. what does her Quarterly payment need to be?

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Answer #1

We can calculate this with PMT function in Excel

EMI value =PMT(rate,nper,pv) =PMT(0.11/4,28,12000)

Where, the rate = 0.11/4, we have divided the rate by 4 because of quarterly payment

nper= Number of installments to be paid = 7*4 =28, because of quarterly payment each year will have 4 EMIs to be paid

pv = present value of loan = OR 12000

Therefore, the quarterly EMI=PMT(0.11/4,28,12000)= OR 620.13 Answer.

Note: The value in excel will come as a negative value which indicates the negative cash flow for borrower.

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