The fruit mart is an all-equity firm with a current cost of equity of 17.4 percent. the estimated earnings before interest and t
1 answer:
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Answer:
$1,223.91
Explanation:
As per the concept of time value of money, the value of money today is more than the value of money tomorrow.
Given:
Price of car = $26,000
Interest rate 12%, compounded monthly
Tenure = 2 years
Now, Price of the car is the value of money today to purchase the car. So, while computing the monthly payment for car $26,000 will be considered as present value.
Monthly payment for car can be computed easily using Microsoft excel.
Use the following mentioned formula to calculate the monthly payment.
"=PMT(rate,nper,pv,[fv])"
wherein,
Rate = 12%/2 (because it has been compounded monthly)
nper = 2*12 (because 2 years are to be compounded monthly.)
Pv = $26,000 (as mentioned earlier)
Since, there is no Fv so it blank.
