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 Salem's annual payment amount X (rounded to four decimal places)?

a. 127447.2640
b. 138483.9116
c. 138875.1596
d. 127697.1917

Answer 1

The value of Salem's annual payment amount X is approximately $127,697.1917.

Step-by-step explanation:

To calculate the value of Salem's annual payment amount X, we can use the present value formula. Given a $300,000 loan with a 6% interest rate convertible monthly over 30 years, we can calculate the monthly payments using the formula:

R = PV / ((1 - (1 + i)^(-n)) / i)

Substituting the values into the formula, we get:

R = 300,000 / ((1 - (1 + 0.06/12)^(-30*12)) / (0.06/12))

Calculating this expression gives us the annual payment amount X which is approximately $127,697.1917. Therefore, the correct answer is option d) 127697.1917.