Answer
The monthly payments necessary on this loan is equal to \$187.57
Work Step by Step
Loan calculations are identical to annuity calculations, so:
The formula for the payment value for a loan is:
$PMT = PV\frac{i}{1-(1+i)^{-n}}$
Where:
$PV= 10,000$
** The withdrawals are made monthly (12 times per year), so m = 12.
$i=r/m=\frac{0.0475}{12}$
$n=mt=12 \times 5=60$
Therefore:
$PMT = (10,000)\frac{\frac{0.0475}{12}}{1-(1+\frac{0.0475}{12})^{-60}} = 187.57$
