Question

Present and future value tables of $1 at 3% are presented below:

N	FV $1	PV $1	FVA $1	PVA $1	FVAD $1	PVAD $1
1	1.03000	0.97087	1.0000	0.97087	1.0300	1.00000
2	1.06090	0.94260	2.0300	1.91347	2.0909	1.97087
3	1.09273	0.91514	3.0909	2.82861	3.1836	2.91347
4	1.12551	0.88849	4.1836	3.71710	4.3091	3.82861
5	1.15927	0.86261	5.3091	4.57971	5.4684	4.71710
6	1.19405	0.83748	6.4684	5.41719	6.6625	5.57971
7	1.22987	0.81309	7.6625	6.23028	7.8923	6.41719
8	1.26677	0.78941	8.8923	7.01969	9.1591	7.23028
9	1.30477	0.76642	10.1591	7.78611	10.4639	8.01969
10	1.34392	0.74409	11.4639	8.53020	11.8078	8.78611
11	1.38423	0.72242	12.8078	9.25262	13.1920	9.53020
12	1.42576	0.70138	14.1920	9.95400	14.6178	10.25262
13	1.46853	0.68095	15.6178	10.63496	16.0863	10.95400
14	1.51259	0.66112	17.0863	11.29607	17.5989	11.63496
15	1.55797	0.64186	18.5989	11.93794	19.1569	12.29607
16	1.60471	0.62317	20.1569	12.56110	20.7616	12.93794

    
Rosie's Florist borrows $400,000 to be paid off in two years. The loan payments are semiannual with the first payment due in six months, and interest is at 6%. What is the amount of each payment?

Multiple Choice

$108,611.

$108,366.

$110,409.

$107,611.

Answer 1

Correct answer----$107,611

Amount borrowed	$ 4,00,000.00
Number of instalments (2 x 2)	4
PVA $1 for 4 terms	3.71710
Instalment amount	$ 1,07,611

Proof for above calculation

Instalment no	Beginning loan balance	Interest on loan	instalments	Principal repayment	Ending loan balance
1	$             4,00,000	$        12,000	$        1,07,611	$             95,611	$           3,04,389
2	$             3,04,389	$          9,132	$        1,07,611	$             98,479	$           2,05,910
3	$             2,05,910	$          6,177	$        1,07,611	$         1,01,433	$          1,04,477
4	$             1,04,477	$          3,134	$        1,07,611	$         1,04,476	$                         0