Fill This Form To Receive Instant Help
Fill This Form To Receive Instant Help
Homework answers / question archive / 1)You have just leased a car that has monthly payments of $395 for the next 4 years with the first payment due today
1)You have just leased a car that has monthly payments of $395 for the next 4 years with the first payment due today. If the APR is 7.56 percent compounded monthly, what is the value of the payments today?
2)Roger has just lost a lawsuit and has agreed to make equal annual payments of $15,300 for the next 7 years with the first payment due today. The value of this liability today is $85,000. What is the interest rate on the payments?
1)please see the attached file.
2)
Answer:
Given
Annuity Due A=$15300
Value of Liability L=$85000
Number of Years N=7 years
Let r be the interest rate
L=A+A*(1-(1+r)^(N-1))/r)
85000=15300+15300*(1-(1+r)^6)/r
Solving for r we get r=8.49%
