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General Computers Inc. purchased a computer server for $58,500. It paid 40.00% of the value as a down payment and received a loan for the balance at 8.00% compounded semi-annually. It made payments of $2,650.41 at the end of every quarter to settle the loan. a. How many payments are required to settle the loan?

User Bork Blatt
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Final answer:

To settle the loan, 14 payments are required.

Step-by-step explanation:

To find out how many payments are required to settle the loan, we need to calculate the present value of the loan and compare it with the payments made at the end of every quarter.

Step 1: Calculate the present value (PV) of the loan using the formula:

PV = Loan Amount - Down Payment = $58,500 - ($58,500 imes 0.4) = $58,500 - $23,400 = $35,100

Step 2: Divide the present value by the quarterly payment to find the number of payments:

Number of payments = PV / Quarterly Payment = $35,100 / $2,650.41 ≈ 13.24

Since we cannot make fractional payments, we need to round up to the nearest whole payment. Therefore, 14 payments are required to settle the loan.

User Kennethvr
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