Question

"If you borrow $8,000 with an interest rate of 4 percent, to be repaid in five equal yearly payments at the end of the next five years, what would be the amount of each payment? Use Exhibit 1-D. (Round time value factor to 3 decimal places and final answer to 2 decimal places.)"

Answer 1

The payments will be of 1,797.02 dollars

Step-by-step explanation:

We need tyo calcualte the PTM of an ordinary annuity which present value is 8,000. The time will be 5 years and the discount rate 4%

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

PV $8,000.00

time 5 years

rate 4% = 4/100 = 0.04

`8000 * (1-(1+0.04)^(-5) )/(0.04) = PTM\\`

PTM: $ 1,797.017