Charles must make a loan payment of $2,486 at the end of each quarter. His nominal...
Charles must make a loan payment of $2,486 at the end of each quarter. His nominal annual loan rate is 2%, compounded quarterly. The original term of the loan was 15 years. How much did Charles originally borrow?
Homework Answers
Answer
the originally borrowed amount is equal to the present value of the cash flow
PV=A*(P|A,i,n)
A=2486
i=effective quarterly =nominal annual /number of compounding =2/4=0.5=r
n=number of quarters =15*4=60
PV=2486*(P|A,0.5%,60)
=2486*51.725560751130985=128589.744
the value is $128589.74
======
also, by formula
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