A group of private investors purchased a condominium complex

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 13 years at an interest rate of 6.1%/year compounded quarterly, find the required quarterly payment. (Round your answer to the nearest cent.)

Solution

Loan Amount to be paid: 4,000,000(1-.12)=$3,520,000

Amortization Formula: PMT = PV [(r/m)/(1-(1+r/m)^(-mt)

PV = $3,520,000
r = .061
m = 4
t = 13

Now, put all the above values in the formula of Amortization to find quaterly payment:

PMT = 3,520,000[(.061/4)/(1-(1+.061/4)^(-4*13) = $ 98,531.57

Therefore, the required quaterly payment is $ 98,531.57 or $ 98,532.