SOLUTION: what is the present value of annuity of A A debt of R1000 with interest at 16% compounded quaterly is to be amortised with equal quarterly payments {all the same size} over the nex

Question 1076751: what is the present value of annuity of A A debt of R1000 with interest at 16% compounded quaterly is to be amortised with equal quarterly payments {all the same size} over the next 5 years. what will be the size of these payments be?
Answer by jorel1380(3719) (Show Source): You can put this solution on YOUR website!
To calculate the amount of quarterly payments, we use the formula Payout=[Principal*(r/n)*((1+r/n)^(y*n))]/[((1+r/n)^(y*n)-1], where r is the yearly interest rate, n is the amount of compounding periods per year, and y is the total number of years of payout. So, we have:
Payments=[1000*(.16/4)*((1+.16/4)^(5*4))]/[((1+.16/4)^(5*4)-1]
Payments=R 73.58 as the amount of quarterly payments. ☺☺☺☺
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