Suppose you borrowed $12,000 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?

Question

Mathematics

Caitlin Oneill

11 September, 07:06

Suppose you borrowed $12,000 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?

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Answers (1)

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Senorita · Answer 1

Use the formula of the present value of annuity ordinary.

The formula is

Pv=pmt [ (1 - (1+r) ^ (-n)) : r]

Pv present value 12000

PMT payment per year?

R interest rate 0.09

N time 4years

We need to solve for pmt

PMT=pv:[ (1 - (1+r) ^ (-n)) : r]

PMT=12,000: ((1 - (1+0.09) ^ (-4)) : (0.09))

PMT=3,704.02