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Jack wants to buy a boat today today but has realised that if he takes out...

Jack wants to buy a boat today today but has realised that if he takes out a loan he can only repay $800 quarterly, with payments made at the beginning of each quarter, over the next 5 years. How much can he spend on his boat today if the interest rate is 13.4% per annum compounded quarterly?

Select one:

a. $11911.92

b. $11525.80

c. $3159.94

d. $2786.54

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Answer #1

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Answer:

PV Of annuity is

P=PMTX -- (b) X (1+1)

=> 800 * (1 -(1/1.0335)20) 0.0335 * (1.0335)

=> 11911.92

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