Question

Kevin took a loan with at 5.1% annually compound semi yearly is being paid $269.93 monthly for 36 months . How Much money was borrowed?

Answer 1

Monthly coumpounding interest rate
Semi annual rate = 5.1%/2 =2.55%
2.55% =(1+r)^6-1
r=0.0042055 or 0.42055%
Compoutation of amount borrowed
Present Value Of An Annuity
= C*[1-(1+i)^-n]/i]
Where,
C= Cash Flow per period
i = interest rate per period
n=number of period
= $269.93[ 1-(1+0.0042055)^-36 /0.0042055]
= $269.93[ 1-(1.0042055)^-36 /0.0042055]
= $269.93[ (0.1402) ] /0.0042055
= $9,000.11