Question 1
Multiple Choice
Confidence Level
0%
Timberline Properties is financing the purchase of a commercial building by borrowing 80% of the $4,500,000 purchase price through a fully amortizing, fixed-rate 20-year mortgage loan. The annual interest rate is 5.4%, and payments are made monthly. The monthly mortgage payment is closest to:
Explanation
Step 1: Calculate the present value of the loan:
Loan = 80% × $4,500,000 = $3,600,000
Step 2: Identify calculator inputs:
N = 20 years × 12 months = 240
I/Y = 5.4% annual ÷ 12 = 0.45% per month
PV = 3,600,000
FV = 0 (fully amortized)
PMT = ?
BA II Plus Steps:
Press 2nd → FV to clear time value memory
Input:
N = 240
I/Y = 0.45
PV = 3600000
FV = 0
CPT → PMT
Output:
→ PMT = -24,915.08
(The result is negative because it represents a cash outflow, i.e., a monthly payment.)