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77julia77 [94]
2 years ago
14

You've lost a lawsuit that requires you to pay $1,500 per month for 120 months starting next month. How much would you have to i

nvest today to exactly pay for the lawsuit ,if your investments earn 3.00% APR (compounded monthly)? Calculate your answer to the nearest dollar. Write only the number with no dollar sign or comma (e.g., 3711) _____ .
Business
1 answer:
Lady bird [3.3K]2 years ago
6 0

Answer:

PV = $155,343

Explanation:

This question requires application of PV of annuity, according to which:

PV = p [1-(1+r)^-n/r]

P= Periodic Payment

r = rate of period

n = number of periods

r = 3%/12 = 0.25% (monthly), n = 120, P = $1500

PV = 1500 * [\frac{1 - (1 + 0.0025)^{-120}}{0.0025}]

PV = 1500 * 103.5618

PV = $155,343

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Hence, the correct answer would be:

A university's decision to add a new residence hall. A trucking firm's decision to move to a smaller facility.

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