Question

On January 1, Year 1, Turner Company borrowed $58,000 from Lessing Inc. and signed a three-year installment note to be paid in three equal payments at the end of each year. The present value of an annuity of $1 for 3 periods at 7% is 2.62432. What is the amount of the installment payment?

Answer 1

Per year installment shall be $22,101

Step-by-step explanation:

By using annuity formula we have

P=$58,000

Annuity Factor=2.62432

P=Installment*2.62432

$58,000=Installment*2.62432

Installment=$58,000/2.6243

Installment per year=$22,101