Question

 
Determine the present value of a series of 60 monthly payments of $2,600 each which beginn 1 month from today. Anume interest of 12 percent per year compounded monthly?
 
​

Answer 1

Step-by-step explanation:

borrower has has the following options for repaying a loan:

sixty monthly payments of 100 at the end of each month

A single payment of 6000 at month k

Interest is a nominal rate of .12 per month meaning i=.12/12=.01.

Find k.

I know the first part is an annuity immediate with

1001−(1.01)−60.01=4495.504.

Now we want to find when 6000 of payment will be equal to the 60 monthly payments of 100 which tells me want to know when will the accumulation of 6000 at .12 will be equal. Since we are working with present value k will be negative

4495.504=6000(1.01)−k→28.9.