Why Choose Us?
0% AI Guarantee
Human-written only.
24/7 Support
Anytime, anywhere.
Plagiarism Free
100% Original.
Expert Tutors
Masters & PhDs.
100% Confidential
Your privacy matters.
On-Time Delivery
Never miss a deadline.
A loan of $78,400 is being repaid by payments of $8,500 at the end of each year plus a final smaller payment one year after the last payment of $8,500
A loan of $78,400 is being repaid by payments of $8,500 at the end of each year plus a final smaller payment one year after the last payment of $8,500. If the annual effective rate of interest on the loan is 7.5%, find the size of the final payment. Answer to the nearest cent.
Given an interest rate of 7.25% compounded monthly, find the present value of a 8 year annuity which pays 395 at the end of each 6 months. Answer to the nearest cent.
A loan of $7,163.84 is to be repaid by payments of 50 every week for 3 years. Calculate the annual nominal rate of interest compounded weekly on the loan.
Expert Solution
Question Summary :
Multiple questions on use of time value of money
Answer 1 :
Given : Loan amount of 78400 $
Instalment of Rs 8500 $ at the enfd of each year
Interest rate 7.5%
By paying $8,500.00 every year, the loan will be paid off in 16 years and 3.3 months.
| Total of 17 Loan Payments | $138,322.58 |
| Interest | $59,922.58 |
Using the Amortization Schedule in Excel made through PMT, IPMT and PPMT functions : Amortization Schedule
| Beginning Balance | Interest | Principal | Ending Balance | |
| 1 | $78,400.00 | $5,880.00 | -$2,620.00 | $75,780.00 |
| 2 | $75,780.00 | $5,683.50 | -$2,816.50 | $72,963.50 |
| 3 | $72,963.50 | $5,472.26 | -$3,027.74 | $69,935.76 |
| 4 | $69,935.76 | $5,245.18 | -$3,254.82 | $66,680.94 |
| 5 | $66,680.94 | $5,001.07 | -$3,498.93 | $63,182.02 |
| 6 | $63,182.02 | $4,738.65 | -$3,761.35 | $59,420.67 |
| 7 | $59,420.67 | $4,456.55 | -$4,043.45 | $55,377.22 |
| 8 | $55,377.22 | $4,153.29 | -$4,346.71 | $51,030.51 |
| 9 | $51,030.51 | $3,827.29 | -$4,672.71 | $46,357.80 |
| 10 | $46,357.80 | $3,476.83 | -$5,023.17 | $41,334.63 |
| 11 | $41,334.63 | $3,100.10 | -$5,399.90 | $35,934.73 |
| 12 | $35,934.73 | $2,695.10 | -$5,804.90 | $30,129.83 |
| 13 | $30,129.83 | $2,259.74 | -$6,240.26 | $23,889.57 |
| 14 | $23,889.57 | $1,791.72 | -$6,708.28 | $17,181.29 |
| 15 | $17,181.29 | $1,288.60 | -$7,211.40 | $9,969.88 |
| 16 | $9,969.88 | $747.74 | -$7,752.26 | $2,217.63 |
| 17 (Partial) | $2,217.63 | $166.32 | $2,217.63 | $0.00 |
Hence last instament of $ 2217 is to be repaid
Answer 2
Given : Interest rate 7.25% compounded monthly
Term : 8 years
Annuity : 395 at the end of each 6 months
PV of Ordinary Annuity?=C × [1−(1+i) ^ −n?]? / i
Present Value (PV) of the Ordinary Annuity
$ 4,713.17
Answer 3 :
Given :
Loan : $ 7163.84
Weekly instalment of 50$ for 3 years
Formula :
The EMI reducing-balance method is calculated using the formula shown below, in which P is the principal amount borrowed, I is the annual interest rate, r is the periodic weekly interest rate, n is the total number of weekly payments, and t is the number of weeks in a year.
(P x I) x ((1 + r)n)/ (t x ((1 + r)n)- 1)
Answer : 5.7180%
Archived Solution
You have full access to this solution. To save a copy with all formatting and attachments, use the button below.
For ready-to-submit work, please order a fresh solution below.
