a. If you borrow $2,900 and agree to repay the loan in six equal annual payments...
a. If you borrow $2,900 and agree to repay the loan in six equal annual payments at an interest rate of 11%, what will your payment be? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
a. Amount of payment:
b. What will your payment be if you make the first payment on the loan immediately instead of at the end of the first year? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
b. Amount of payment:
Homework Answers
a.Present value of annuity=Annuity[1-(1+interest rate)^-time period]/rate
2900=Annuity[1-(1.11)^-6]/0.11
2900=Annuity*4.230537854
Annuity=2900/4.230537854
=$685.49(Approx).
b.Present value of annuity due=(1+rate)*Annuity[1-(1+interest rate)^-time period]/rate
2900=1.11*Annuity[1-(1.11)^-6]/0.11
2900=Annuity*4.695897018
Annuity=2900/4.695897018
=$617.56(Approx).
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