Questions: Calculate the monthly payment by table lookup and formula. (Answers will not be exact due to rounding of percents in table lookup.). (Use 13% for table lookup.). (Use the loan amortization table) Note: Round your answers to the nearest cent.

Solution Steps

To calculate the monthly payment for a loan, we can use the loan amortization formula. The formula for the monthly payment \( M \) is given by:

\[ M = \frac{P \cdot r \cdot (1 + r)^n}{(1 + r)^n - 1} \]

where:

• \( P \) is the principal loan amount,
• \( r \) is the monthly interest rate (annual rate divided by 12),
• \( n \) is the total number of payments (loan term in years multiplied by 12).

For the table lookup, you would typically use a pre-calculated table based on the interest rate and loan term, but since we don't have the table here, we'll focus on the formula calculation.

To find the monthly payment \( M \) for a loan, we use the formula:

\[ M = \frac{P \cdot r \cdot (1 + r)^n}{(1 + r)^n - 1} \]

where:

• \( P = 10000 \) (principal amount),
• \( r = \frac{13}{100 \cdot 12} = 0.0108333 \) (monthly interest rate),
• \( n = 5 \cdot 12 = 60 \) (total number of payments).

Substituting the values into the formula gives:

\[ M = \frac{10000 \cdot 0.0108333 \cdot (1 + 0.0108333)^{60}}{(1 + 0.0108333)^{60} - 1} \]

After performing the calculations, we find:

\[ M \approx 227.53 \]

Final Answer