Ken just purchased new furniture for his house at a cost of $15,400. The loan calls for weekly payments for the next 5 years at an annual interest rate of 10.39 percent. How much are his weekly payments?
$78.53
$59.23
$79.80
$78.90
$76.00
Your parents are giving you $270 a month for 4 years while you are in college. At an interest rate of .61 percent per month, what are these payments worth to you when you first start college?
$15,004.18
$11,004.00
$11,205.65
$10,832.13
$10,645.37
Answer to Question 1:
Amount borrowed = $15,400
Annual Interest Rate = 10.39%
Weekly Interest Rate = 10.39%/52 = 0.20%
Period = 5 years or 260 weeks
Weekly Payment * PVIFA(0.20%, 260) = $15,400
Weekly Payment * (1 - (1/1.002)^260) / 0.002 = $15,400
Weekly Payment * 202.58532 = $15,400
Weekly Payment = $76.00
Answer to Question 2:
Monthly Payment = $270
Period = 4 years or 48 months
Monthly Interest Rate = 0.61%
Present Value = $270 * PVIFA(0.61%, 48)
Present Value = $270 * (1 - (1/1.0061)^48) / 0.0061
Present Value = $270 * 41.50241
Present Value = $11,205.65
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