Question

Krista borrowed$ 16,217. The loan is to be repaid by three equal payments due in 89,165 , and 261 days from now respectively. Determine the size of the equal payments at an interest rate of

Answer 1

To determine the size of the equal payments for Krista's loan, we need to calculate the present value of the loan and then divide it by the present value of an annuity factor.

Step-by-step explanation:

To determine the size of the equal payments for Krista's loan, we need to calculate the present value of the loan and then divide it by the present value of an annuity factor. The present value of the loan can be calculated using the formula:

PV = FV / (1 + r)^n

Where PV is the present value, FV is the future value (loan amount), r is the interest rate, and n is the number of days. Substituting the given values, we have:

PV = $16,217 / (1 + 0.068)^89 + $16,217 / (1 + 0.068)^165 + $16,217 / (1 + 0.068)^261

Calculating these values will give us the present value (loan amount) of the three equal payments. Finally, we divide this amount by 3 to find the size of the equal payments.