Question

Blackboard - Athens State University 3 Homework i Appendix B Homework Saved Help Save & Exit Submit Check my work Compute the amount that can be borrowed under each of the following circumstances: (PV of $1. FV of $1. PVA of $1, and EVA of $1) (Use appropriate factor(s) from the tables provided. Round your "Table value to 4 decimal places.) 1. A promise to repay $95,000 ten years from now at an interest rate of 9%. 2. An agreement made on February 1, 2019, to make three separate payments of $11,000 on February 1 of 2020, 2021, and 2022. The annual interest rate is 7%. Option 1 Table Value Amount Present Value Loan amount $ Option 2 Table Va

Answer 1

Here are the step-by-step solutions for the problems:

1. A promise to repay $95,000 ten years from now at an interest rate of 9%.

Given:

- Loan amount = $95,000

- Interest rate = 9%

- Time = 10 years

We need to find the present value using the appropriate factor from the tables.

From the tables, the present value factor for 9% interest and 10 year period is 0.5782 (rounded to 4 decimal places)

So, the present value = $95,000 * 0.5782 = $54,917

2. An agreement made on February 1, 2019, to make three separate payments of $11,000 on February 1 of 2020, 2021, and 2022. The annual interest rate is 7%.

Given:

- Payment = $11,000

- Number of payments = 3

- Interest rate = 7%

- Time for each payment = 1 year, 2 years and 3 years

We need to find the EVA (Equal Value of an Annuity) factor from the tables.

The EVA factor for 7% interest and 3 year period is 2.4213

Total present value = $11,000 * 2.4213 = $26,634

Hope this helps! Let me know if you have any other questions.