Question : Interest rate?
If there's an interest rate given e.g. 8% annual rate but we have to find monthly payments for 4 yrs., how is the rate changed from annual to monthly?E.G. for finding annuity, I'll put in 48 months but what is the 8% yearly interest rate going to be?Thankssome more info:lets say somene borrows 30000 loan and has to pay for a car which will have an interest of 8% annual rate and what is the monthly payment on a 4 year loan?
- asked by S
All Answers:
Answer #1
How much is the loan for/annuity balance that ishow you would figure it out. Using a financialcalculator, and assuming you make the payments atthe end of the month, your payment amount would be$243.75 a month on a $10,000 loan and 48 monthlypayments. If we are talking an annuity and youwant to know how much to put in you need to know aFuture Value. To anwser this question you aremissing information. First you need either apresent value or some future value. You need theinterest rate (I/Y), you need the number ofmonthly payments (n). Another option is tocalculate the Holding Period Yield for each monthbased on the 8% Effective Annual Yield. It couldalso be as simple as 8/12=0.66% monthly. Yourquestion doesn't make sense though, moreinformation is needed to figure out yourparticular case.Edit: To anwser the specificexample you added. The answer is: $ 732.95 permonth. Using a financial calculator to get thepayment, N=48, I=0.66 (8/12), PV= 30,000, FV=0then just compute payment. Hope that helps!
- answered by financegal27
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