You are thinking about buying a piece of art that costs $50,000. The art dealer is...
You are thinking about buying a piece of art that costs $50,000. The art dealer is proposing a deal: She will lend you the money, and you will repay the loan by making the same payment every year for the next 10 years. If the interest rate is 4% compounded annually, how much will you have to pay every year ?
Homework Answers
Ans $ 6164.55
| P = | Regular Payments |
| PV = | Loan Amount |
| r = | rate of interest |
| n = | no of periods |
| P = | r (PV) |
| 1 - (1 + r )-n | |
| P = | 4% * 50000 |
| 1 - (1 / (1 + 4%)^10)) | |
| P = | 2000 |
| 0.324435831 | |
| P = | 6164.55 |
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