You need to borrow by taking a 12-year loan. Your budget allows us to pay $980...
You need to borrow by taking a 12-year loan. Your budget allows us to pay $980 at the end of each year for the length of the loan’s term as the loan payment. Annual rate is 5%. How much can you borrow today?
Homework Answers
Ans $ 8685.99
| P = | Regular Payments |
| PV = | Loan Amount |
| r = | rate of interest |
| n = | no of periods |
| P = | r (PV) |
| 1 - (1 + r )^-n | |
| 980 = | 5% *PV |
| 1 - (1 / (1 + 5%)^12)) | |
| 980 = | 0.05 * PV |
| 0.443162581822441 | |
| PV = | 980 / 0.05 * 0.443162581822441 |
| PV = | 8685.99 |
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