Question

For an interest rate of 13% compounded annually, determine the following (a) How much can be lent now if $18,000 will be repaid at the end of four years? (b) How much will be required in six years to repay a $26,000 loan received now? Click the icon to view the interest factors for discrete compounding when ,-13% per year (a) The amount to be lent now is $ . (Round to the nearest dollar) More Info Compound Present Worth Factor Amount Factor Compound Sinking Fund Factor Present Worth Factor Capital Recovery Factor Amount Factor (F/P I, N) (P/F, I, N) 0.8850 0.7831 0.6931 0.6133 0.5428 (FIA, I,N (A/F , N) (P/A, IN) (A/P I, N) 1.1300 1.2769 1.4429 1.6305 1.8424 1.0000 2.1300 3.4069 4.8498 6.4803 1.0000 0.4695 0.2935 0.2062 0.1543 0.8850 1.6681 2.3612 2.9745 3.5172 1.1300 0.5995 0.4235 0.3362 0.2843 2.0820 2.3526 2.6584 3.0040 3.3946 0.4803 0.4251 0.3762 0.3329 0.2946 8.3227 10.4047 12.7573 15.4157 18.4197 0.1202 0.0961 0.0784 0.0649 0.0543 3.9975 4.4226 4.7988 5.1317 5.4262 0.2502 0.2261 0.2084 0.1949 0.1843 10 PrintDone nter your answer in the answer box and then click Check Answer.

Answer 1

(a)

The amount to be lent now is

$ 11,039

Working:

The amount to be lent now is present value of amount to be repaid at the end of 4 Years.

Present Value of amount to be repaid

=

Amount to be repaid x Present Value of 1 to be paid at the end of 4 years

=

$       18,000

x

0.6133

=

$       11,039

(b)

The amount will be required in six years

$       54,132

Working:

Future Value of Amount to be paid

=

Loan received now x Future Value of 1

=

$       26,000

x

2.0820

=

$       54,132