Question

Otto Co. borrows money on April 30, 2016, by promising to make four payments of $18,000 each on November 1, 2016; May 1, 2017; November 1, 2017; and May 1, 2018. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. Round "Table Factor" to 4 decimal places.)

1. How much money is Otto able to borrow if the interest rate is 4%, compounded semiannually?

	Periodic Cash Flow Table Factor Present Value =

2. How much money is Otto able to borrow if the interest rate is 8%, compounded semiannually?

	Periodic Cash Flow Table Factor Present Value =

3. How much money is Otto able to borrow if the interest rate is 10%, compounded semiannually?
  

	Periodic Cash Flow Table Factor Present Value =

Answer 1

1
Periodic Cash Flow	X	Table Factor	=	Present Value
18000	X	3.8077	=	68538.60
2
Periodic Cash Flow	X	Table Factor	=	Present Value
18000	X	3.6299	=	65338.20
3
Periodic Cash Flow	X	Table Factor	=	Present Value
18000	X	3.5460	=	63828.00
Alternatively if amounts are rounded off:
1
Periodic Cash Flow	X	Table Factor	=	Present Value
18000	X	3.8077	=	68539
2
Periodic Cash Flow	X	Table Factor	=	Present Value
18000	X	3.6299	=	65338
3
Periodic Cash Flow	X	Table Factor	=	Present Value
18000	X	3.5460	=	63828