8. You desperately need some money and only your ‘miserly' friend has any. He agrees to...

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

Expert Solution

	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%

jeff jeffy answered 2 years ago

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