Question

Problem 1AB from Pearson Textbook for Finance Made Easy: Abella has been living very long in France after moving from Germany. She decides to go to the bank to conduct some business. A nationally government owned bank in France is charging 12% and she wishes to borrow $300,000 and pay the loan off at $66,180 per year. (Use C

Find out the information below:

How long will this take in years for Abella?
What are Abella’s interest charges only in her first year?

12% Compound Interest Factors 12% Present Worth Factor Find P Given A Arithmetic Gradient Gradient Gradient Uniform Present Series Worth Find A Find P Given G Given G A/G P/G P/A 11 Sinking Fund Factor Find A Given F A/F 1.0000 4717 .2963 .2092 .1574 .1232 .0991 .0813 .0677 .0570 .0484 .0414 .0357 .0309 .0268 .0234 .0205 .0179 .0158 .0139 .0122 .0108 .00956 .00846 .00750 13 14 16 Single Payment Compound Present Amount Worth Factor Factor Find F Find P Given P Given F F/P P/F 1.120 .8929 1.254 .7972 1.405 .7118 1.574 .6355 1.762 .5674 1.974 .5066 2.211 .4523 2.476 4039 2.773 .3606 3.106 .3220 3.479 .2875 3.896 .2567 4.363 .2292 4.887 .2046 5.474 .1827 6.130 .1631 6.866 .1456 7.690 .1300 8.613 .1161 9.646 .1037 10.804 .0926 12.100 .0826 13.552 .0738 15.179 .0659 17.000 .0588 19.040 .0525 21.325 .0469 23.884 .0419 26.750 .0374 29.960 .0334 33.555 .0298 37.582 .0266 42.092 .0238 47.143 .0212 52.800 .0189 93.051 .0107 163.988 .00610 289.002 .00346 509.321 .00196 897.597 .00111 -|--* o***2=993425293|5a82a4427748794173 Uniform Payment Series Capital Compound Recovery Amount Factor Factor Find A Find F Given P Given A A/P F/A 1.1200 1.000 .5917 2.120 4163 3.374 .3292 4.779 .2774 6.353 .2432 8.115 .2191 10.089 .2013 12.300 .1877 14.776 .1770 17.549 .1684 20.655 .1614 24.133 .1557 28.029 .1509 32.393 .1468 37.280 .1434 42.753 .1405 48.884 .1379 55.750 .1358 63.440 .1339 72.052 .1322 81.699 .1308 92.503 .1296 104.603 .1285 118.155 .1275 133.334 .1267 150.334 .1259 169.374 .1252 190.699 .1247 214.583 .1241 241.333 .1237 271.293 .1233 304.848 .1229 342.429 .1226 384.521 .1223 431.663 .1213 767.091 1358.2 .1204 2400.0 .1202 4236.0 .1201 7471.6 19 0.893 1.690 2.402 3.037 3.605 4.111 4.564 4.968 5.328 5.650 5.938 6.194 6.424 6.628 6.811 6.974 7.120 7.250 7.366 7.469 7.562 7.645 7.718 7.784 7.843 7.896 7.943 7.984 8.022 8.055 8.085 8.112 8.135 8.157 8.176 8.244 8.283 8.304 8.317 8.324 0.472 0.925 1.359 1.775 2.172 2.551 2.913 3.257 3.585 3.895 4.190 4.468 4.732 4.980 5.215 5.435 5.643 5.838 6.020 6.191 6.351 6.501 6.641 6.771 6.892 7.005 7.110 7.207 7.297 7.381 7.459 7.530 7.596 7.658 7.899 8.057 8.160 8.225 8.266 0.797 2.221 4.127 6.397 8.930 11.644 14.471 17.356 20.254 23.129 25.952 28.702 31.362 33.920 36.367 38.697 40.908 42.998 44.968 46.819 48.554 50.178 51.693 53.105 54.418 55.637 56.767 57.814 58.782 59.676 60.501 61.261 61.961 62.605 65.116 66.734 67.762 68.408 68.810 .00665 .00590 .00524 .00466 .00414 .00369 .00328 .00292 .00260 .00232 35 .1207 50 .00130 .00074 .00042 .00024 .00013

Answer 1

1.
300000=66180*(P/A(12%,n))
=>P/A(12%,n)=300000/66180
=>P/A(12%,n)=4.533091568

So, n=7

2.
=Amount borrowed*rate
=300000*12%=36000