In: Finance
8.
You desperately need some money and only your ‘miserly' friend has any. He agrees to loan you the money you need, if you make payments of $20 a month for the next six months. In keeping with his reputation, he requires that the first payment be paid today. He also charges you 1.5 percent interest per month. How much money are you borrowing?
$126.46
$114.96
$113.94
$115.65
$116.56
Borowing today | P+P×[1-(1÷(1+r))^(n-1)]÷r | |
Here, | ||
1 | Interest rate per annum | 18.00% |
2 | Number of years | 0.5 |
3 | Number of compoundings per per annum | 12 |
4 = 1÷3 | Interest rate per period ( r) | 1.50% |
5 = 2×3 | Number of periods (n) | 6 |
Payment per period (P) | $ 20 | |
Borowing today | $ 115.65 | |
20+20×(1-(1+1.5%))^(6-1))÷1.5% |