Financial Risk Manager Part 1

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Explanation:

The monthly installments of $923.93 for the monthly periods of 20 years (12×20=240) at the rate of 5% results in the present value of the loan that is $140,000.

The easiest way to solve this problem is with the help of the financial calculator: N = 20 × 12 = 240; I/Y = 5/12 = 0.4167; PV = 140,000; FV = 0; CPT => PMT = -923.94

This installment can also be calculated with the simple annuity formula as follows:

$PV = \text{installment} \cdot \frac{[1 - (1 + r)^{-n}]}{r}$

Since the annual rate of interest is 5%, the monthly rate can be approximated as 5%/12 = 0.004167 or 0.4167%

Thus, $`$ 140`,000 = \text{installment} \cdot \frac{[1 - 1.004167^{-240}]}{0.004167}$$

$\text{Installment} = \frac{140,000}{\frac{[1 - 1.004167^{-240}]}{0.004167}} = \`$923.94`$

Explanation:

The monthly installments of $923.93 for the monthly periods of 20 years (12×20=240) at the rate of 5% results in the present value of the loan that is $140,000.

The easiest way to solve this problem is with the help of the financial calculator: N = 20 × 12 = 240; I/Y = 5/12 = 0.4167; PV = 140,000; FV = 0; CPT => PMT = -923.94

This installment can also be calculated with the simple annuity formula as follows:

$PV = \text{installment} \cdot \frac{[1 - (1 + r)^{-n}]}{r}$

Since the annual rate of interest is 5%, the monthly rate can be approximated as 5%/12 = 0.004167 or 0.4167%

Thus, $`$ 140`,000 = \text{installment} \cdot \frac{[1 - 1.004167^{-240}]}{0.004167}$$

$\text{Installment} = \frac{140,000}{\frac{[1 - 1.004167^{-240}]}{0.004167}} = \`$923.94`$

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Q.919 Mohan Singh, a sales manager at a retail chain, has recently moved to Minnesota with his wife. He purchased a studio apartment with a mortgage loan of `$140`,000 at 5% for 20 years. Which of the following is the most appropriate estimation of the monthly installments on this loan?

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Last updated: July 21, 2026 at 02:10

$1,004.61

$923.94

$763.84

$340.60

Financial Risk Manager Part 1

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Q.919 Mohan Singh, a sales manager at a retail chain, has recently moved to Minnesota with his wife. He purchased a studio apartment with a mortgage loan of $140,000 at 5% for 20 years. Which of the following is the most appropriate estimation of the monthly installments on this loan?

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Q.919 Mohan Singh, a sales manager at a retail chain, has recently moved to Minnesota with his wife. He purchased a studio apartment with a mortgage loan of `$140`,000 at 5% for 20 years. Which of the following is the most appropriate estimation of the monthly installments on this loan?