Final answer:
To calculate the monthly payment of a loan, we can use the formula: PMT = PV * i / (1 - (1 + i)^(-n)). In this case, PMT = $7500, i = 7% (or 0.07), and n = 3. Plugging in these values, we can solve for PV.
Step-by-step explanation:
To calculate the monthly payment of a loan, we can use the formula:
PMT = PV * i / (1 - (1 + i)^(-n))
Where:
PMT = monthly payment
PV = present value of the loan
i = interest rate per period
n = number of periods
In this case, PMT = $7500, i = 7% (or 0.07), and n = 3.
Plugging in these values, we get:
PMT = PV * 0.07 / (1 - (1 + 0.07)^(-3))
Solving for PV, we find:
PV = PMT * (1 - (1 + 0.07)^(-3)) / 0.07