Otto Co. borrows money on April 30, 2016, by promising to make four payments of $19,000...
Otto Co. borrows money on April 30, 2016, by promising to make four payments of $19,000 each on November 1, 2016; May 1, 2017; November 1, 2017; and May 1, 2018. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. Round "Table Factor" to 4 decimal places.)
1. How much money is Otto able to borrow if the interest rate is 6%, compounded semiannually?
2. How much money is Otto able to borrow if the interest rate is 10%, compounded semiannually?
3. How much money is Otto able to borrow if the interest rate is 12%, compounded semiannually?
Homework Answers
| a) Present Value = $19000 x PVA(3%,4) = 19000 x 3.7171 | $ 70,624.9 |
| b) Present Value = $19000 x PVA(5%,4) = 19000 x 3.5460 | $ 67,374.00 |
| c) Present Value = $19000 x PVA(6%,4) = 19000 x 3.4651 | $65836.900 |
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Otto Co. borrows money on April 30, 2016, by promising to make
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