Question

on present value of annuity sheila davidson borrowered money from her credit union and agreed to repay the loan in blended monthly payments of $161.75 over a 4 year period. interest on the loan was 9% compounded monthly

Business Math 2 G6 e https//clansroom.google.com/1//MauoOTO3MOYEMDa c) How much interest will there be? On present value of annuity Sheila davidson borrowed money from her credit union and agreed to repay the loan in blended monthly payments of $161.75 over a 4 year period. interest on the loan was 9% compounded monthly a) how much did she borrow? b) if shiela did not make in the first year, and if the credit union demanded payments in full, how much money did she do? c) assuming the situation b) occurs, what would the cost of the loan be? d)if she missed the first 11 payments, how much would she have to pay at the end of the first year to bring her payments up to date? e) How much of the loan cost is additional interest paid on the missed payments? size of payment 1. what payment is required at the end of each month for five years to repay a loan of $8000 at 8.5% compounded monthly? 2. How much must be deposited at the end of each quarter for nine years to accumulate to $11000 if the interest is 4% compounded quarterly? terms of payment n a car loan of $12000 is to be repaid with end of month payments of $292.96 if the interest rate is 8% compounded monthly, what is the term of the loan? 525 PM D4 d ENG 2019 06-26 Type here to search DELL

Answer 1

The formulla for Amount of coumpound intertest is A = P ( 1+r)ⁿ

Now here A= 48* $161.7 , r = 1/12 and n = 48

thuss P =  48* $161.7 / ( 1 + 1/12) ⁴⁸

  = 5422.383

B) Now she did not make it in the first year and credit union demanded full so she will pay have to pay the period into the

sum for each period ie, 161.7 * 12 = 1940.4

C) If situation B occurs cost of the loan wont change much except for the simple interest gained on the monthly payments so it would be Simple interest on 1940.4 if payments would have been monthly.

i.e approximately 1/2 *9/100 * 1940 i.e 87.3

D If she missed 1st 11 payments she would have to pay 161.7 * 12 + Simple interest

i,e 2022.3

E The % of loan cost that is payed because of missed payments is

for 9% interest rate the payment is 1940 so for 2022 the equivalent % is 9.38%

So 0.38% additional interest is payed because of the missed payments