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Home Q & A Board Science-Related Homework Help Mathematics
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Lada Lada
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6 years ago
A debt of $42 500.00 is repaid by payments of $4850.00 made at the end of each year. Interest is 7% compounded semi-annually.
a) How many payments are needed to repay the debt?
b) What is the cost of the debt for the first three years?
c) What is the principal repaid in the 3rd year?
d) Construct an amortization schedule showing details of the first three payments, the last three payments, and totals.
Textbook 
Contemporary Business Mathematics with Canadian Applications

Contemporary Business Mathematics with Canadian Applications


Edition: 11th
Authors:
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#1
6 years ago
a)    p =  - 1 = 0.071225    
   n = 
   =   =   = 14.22222256 payments
b)    PVn = 4850.00  = 4850.00(7.5530728) = $36 632.42
   Total paid = 3(4850.00)     = $14 550.00
   Principal repaid 42500.00 - 36632.42    =   5867.58
   Total cost    $ 8682.42
c)    PVn = 4850.00
            = 4850.00(7.9843889) = $38 724.29
   38724.29 - 36632.42 = $2091.87 repaid in year 3.


d) (Rounded to the nearest cent)


   PVn = 4850
          = 4850(1.99059863) = $9654.40
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