Question

Assume that all annual repayments will be paid at the end of each year (the first payment will be at the end of the first year), what is the value of Fatima's annual payment amount X (rounded to four decimal places)?

a. 120442.1009
b. 120287.3129
c. 128818.0513
d. 128581.0281

Answer 1

The value of Fatima's annual payment amount X is b)120287.3129.

Step-by-step explanation:

To calculate the annual payment amount, we can use the present value formula for an ordinary annuity:

PV = X * (1-(1+r)^(-n))/r

Where PV is the present value (loan amount), X is the annual payment amount, r is the interest rate, and n is the number of years.

In this case, the present value is $573,847.99, the interest rate is 4.2% (0.042), and the number of years is 30. Solving for X, we get:

X = 573,847.99 * (0.042/(1-(1+0.042)^(-30))) = $12,0287.3129

Therefore, the correct answer is b)120287.3129.