Question

Suppose you borrowed $37,000 at a rate of 9.0% and must repay it in 4 equal installments at the end of each of the next 4 years. How large would your payments be?

Answer 1

Answer:

C = 11,420.7405

Explanation:

Loan for 37,000 at 9% in four annual payment

We have to calculate the cuota of an annuity

$C * \frac{1-(1+r)^{-time}}{rate} = PV$

where rate = 0.09

time = 4

and present value is the 37,000 we receive today

$C \times \frac{1-(1+0.09)^{-4}}{0.09} = 37,000\\\\\frac{37,000}{3.239719877} = C$

C = 11,420.7405