1. State the problem: We need to calculate the monthly payment on a $260000 loan with an annual interest rate of 4.69% over 10 years, compounded monthly. 2. Identify the variables for the PMT function in Excel: - Rate (monthly interest rate): $$\frac{4.69\%}{12} = \frac{0.0469}{12} = 0.00390833$$ - Nper (total number of payments): $$10 \times 12 = 120$$ months - Pv (present value or loan amount): $$260000$$ 3. The PMT function formula is: $$\text{PMT} = \frac{r \times PV}{1 - (1 + r)^{-n}}$$ where $r$ is the monthly interest rate, $PV$ is the loan amount, and $n$ is the total number of payments. 4. Substitute the values: $$\text{PMT} = \frac{0.00390833 \times 260000}{1 - (1 + 0.00390833)^{-120}}$$ 5. Calculate the numerator: $$0.00390833 \times 260000 = 1016.1667$$ 6. Calculate the denominator: First, compute $$1 + 0.00390833 = 1.00390833$$ Raise to the power $$-120$$: $$1.00390833^{-120} = \frac{1}{1.00390833^{120}}$$ Calculate $$1.00390833^{120}$$: Using approximation, $$1.00390833^{120} \approx e^{120 \times \ln(1.00390833)} \approx e^{120 \times 0.003900} = e^{0.468} \approx 1.597$$ Therefore, $$1.00390833^{-120} \approx \frac{1}{1.597} = 0.626\$$ Then the denominator: $$1 - 0.626 = 0.374$$ 7. Finally, calculate the payment: $$\text{PMT} = \frac{1016.1667}{0.374} = 2716.9$$ 8. The monthly payment on the loan is approximately $2716.90