Adam borrows $4,500 at 12 percent annually compounded interest to be repaid in four equal annual installments. the actual end-of

Question

lozanna [386]

3 years ago

13

Adam borrows $4,500 at 12 percent annually compounded interest to be repaid in four equal annual installments. the actual end-of

-year payment is ________.

Business

1 answer:

Kazeer [188] · Answer 1 · 2022-07-23T01:05:02+03:00

Use the formula of the present value of an annuity ordinary which is
Pv=pmt [(1-(1+r)^(-n))÷r]
Pv present value 4500
PMTthe actual end-of-year payment?
R interest rate 0.12
N 4 equal annual installments
Solve the formula for PMT
PMT=pv÷[(1-(1+r)^(-n))÷r]
PMT=4,500÷((1−(1+0.12)^(−4))÷(0.12))
PMT=1,481.55