Question

Suppose you borrowed $37,000 at a rate of 9.0% and must repay it in 4 equal installments at the end of each of the next 4 years. How large would your payments be?

Answer 1

C = 11,420.7405

Step-by-step explanation:

Loan for 37,000 at 9% in four annual payment

We have to calculate the cuota of an annuity

`C * (1-(1+r)^(-time))/(rate) = PV\\`

where rate = 0.09

time = 4

and present value is the 37,000 we receive today

`C * (1-(1+0.09)^(-4))/(0.09) = 37,000\\\\(37,000)/(3.239719877) = C`

C = 11,420.7405