Based on the calculations below, the amount originally borrowed by Colin is $10,006.67.
<h3>How do we calculate the original amount using PV formula?</h3>
To solve this question, the following present value (PV) formula will be used:
PVn = Pn / (1 + r)^n ........................... (1)
Where:
PVn = Present value of an amount paid in year n
P = Amount paid in year n
r = quarterly interest rate = 7.16% / Number of quarters in a year = 0.0716 / 4 = 0.0179
n = number of quarters = Number of years * Number of quarters in a year = Number of years * 4
Using equation (1), we can therefore proceed as follows:
PV3 = PV of $5,000 paid after three years = $5,000 / (1 + 0.0179)^(3 * 4) = $4,041.18
PV5 = PV of $5,000 paid after another 2 years (after 3 years + 2 years = 5) = $5,000 / (1 + 0.0179)^(5 * 4) = $3,506.45
PV10 = PV of $5,000 paid after another 5 years (after 3 years + 2 years + 5 years = 10) = $5,000 / (1 + 0.0179)^(10 * 4) = $2,459.04
Therefore, we have:
Original amount borrowed = PV3 + PV5 + PV10 = $4,041.18 + $3,506.45 + $2,459.04 = $10,006.67
Learn more about borrowing here: brainly.com/question/4239348.
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