# Answer to Question #74225 in Microeconomics for zulfiqar

Question #74225

A couple borrows $1 Million to buy a car. The loan agreement specifies that monthly payments are to be made for four years. The annual interest rate is 12 percent. Determine the monthly payment ?

Expert's answer

We use financial functions of Excel:

For example: PMT (12%/12; 4*12; 1,000,000) = $26 333.84,

Where 12% is annual interest rate, 12%/12 is monthly interest rate, 4*12 is number of months, 1,000,000 is credit.

So, monthly payment is $26 333.84

For example: PMT (12%/12; 4*12; 1,000,000) = $26 333.84,

Where 12% is annual interest rate, 12%/12 is monthly interest rate, 4*12 is number of months, 1,000,000 is credit.

So, monthly payment is $26 333.84

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