Homework Answers
Information provided:
Present value= $2,000
Semi-annual payment= $100
Interest rate= 6%/2= 3% per semi-annual period
The time to pay off the debt is calculated by entering the below in a financial calculator:
PV= -2,000
PMT= 100
I/Y= 3
Press the CPT key and N to pay off the debt.
The value obtained is 30.9889.
Therefore, it will take 30.9889/2= 15.4995 years 15.5 years to pay off the debt.
Hence, the answer is option a.
In case of any query, kindly comment on the solution.
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