Question

In: Finance

You owe your parents $28,000 (in present day dollars) and want to repay them in equal...

You owe your parents $28,000 (in present day dollars) and want to repay them in equal amounts the first to occur in 3 years from today and the other in 8 years from today. If the interest rate is 10.9% per annum compounding monthly, what will be the amount of each repayment?

Select one:

a. $24520

b. $38774

c. $66705

d. $38191

Solutions

Expert Solution

Given that,

Amount owe to parent = $28000

to equal installment of A are to be made for it at year 3 and year 8.

Interest rate r = 10.9% compounded monthly

So, using compounding formula, we get

28000 = A/(1+0.109/12)^(12*3) + A/(1+0.109/12)^(12*8)

=> 28000 = 1.17A

=> A = $24520

Option A is correct.


Related Solutions

You have received $100 from your parents to spend, but they want you to spend equal...
You have received $100 from your parents to spend, but they want you to spend equal amounts of it (labeled X) at the start of the next month (time period or t1) and at the start of the second month (t2). How much money can you spend each time (X)? Assume a monthly interest rate of 10%. HINT:- Use the compound interest formulae to spell out the relation between X occurring at t1 and t2 and some P1 and some...
You owe your best friend $2,700. Because you are short on cash, you offer to repay...
You owe your best friend $2,700. Because you are short on cash, you offer to repay the loan over 10 months under the following condition. The first payment will be $90 at the end of month one. The second payment will be $90+ G at the end of month two. At the end of month three, you'll repay $90+2G. This pattern of increasing G amounts will continue for all remaining months. a. What is the value of G if the...
you owe your best friend $2000. because you are short on cash, you offer to repay...
you owe your best friend $2000. because you are short on cash, you offer to repay the loan over 12 months under the following condition. the first payment will be $100 at the end of month one. the second payment will be $100+G at the end of month two. at the end of month three, you'll repay $100+2G. this pattern of increasing G amounts will continue for all remaining months. a. what is the value of G if the interest...
You owe 2000 dollars on your credit card which has an interest rate of 18% per...
You owe 2000 dollars on your credit card which has an interest rate of 18% per year compounded monthly. If you plan to pay it off in 4 years, what are your monthly payments? 2 decimals What are the total payments? Round to nearest whole dollar. How much total interest is paid? Nearest whole dollar. What is the unpaid balance after 1 year? Round to nearest whole dollar.
Celeste just borrowed 47,700 dollars. She plans to repay this loan by making equal quarterly payments...
Celeste just borrowed 47,700 dollars. She plans to repay this loan by making equal quarterly payments of 2,271.5 dollars for 27 quarters. If she makes her first quarterly payment later today, then what is the quarterly interest rate on the loan? Answer as a rate in decimal format so that 12.34% would be entered as .1234 and 0.98% would be entered as .0098.
you lend a friend 25,000, which your friend will repay in 14 equal annual end of...
you lend a friend 25,000, which your friend will repay in 14 equal annual end of year payments of $4,000 w/ the first payment to be recieved 1 yr from now. ehat rate does your loan recieve ?
Your sibling wants to borrow money from you that she can repay in four equal annual...
Your sibling wants to borrow money from you that she can repay in four equal annual payments of $1,000 at the end of each of the next four years. If you charge 3% interest rate on the loan to your sibling, and that is the competitive interest rate, what would be the amount that you can lend to her today? Group of answer choices $ 3,717.10 $ 3,828.61 $ 3,956.72 $ 4,310.13 $ 3,,549.95 $ 3,289.55
. Your company is planning to borrow $300,000 now and repay it in equal installments during...
. Your company is planning to borrow $300,000 now and repay it in equal installments during the next four years at 5 percent annual interest rate to fully amortize the loan. Calculate the equal yearly installments to fully repay the loan. Show your Work b.   Prepare a complete schedule of amortization table for this loan. Show it   in a table.
Question You have wealth that was inherited from your own parents and grandparents. You want to...
Question You have wealth that was inherited from your own parents and grandparents. You want to help people with the wealth. At the same time, you also want to acquire profit as an income generation for you and your family’s daily survival and future saving. You do not agree with the concept of interest in the current conventional finance and you see Islamic ethics as a way of life. You intend to open your own company. Discuss how can you...
Question You have wealth that was inherited from your own parents and grandparents. You want to...
Question You have wealth that was inherited from your own parents and grandparents. You want to help people with the wealth. At the same time, you also want to acquire profit as an income generation for you and your family’s daily survival and future saving. You do not agree with the concept of interest in the current conventional finance and you see Islamic ethics as a way of life. You intend to open your own company. Discuss how can you...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT