Question 1193608: Find the cash price of a property if it is bought for ₱150,000
downpayment and payments of ₱15,000 at the end of every 3 months
for 7 years if money is worth 10% compounded quarterly.
Answer by yurtman(42)   (Show Source):
You can put this solution on YOUR website! **1. Determine the Quarterly Interest Rate**
* Annual Interest Rate: 10%
* Quarterly Interest Rate: 10% / 4 = 2.5% or 0.025
**2. Calculate the Number of Quarterly Payments**
* Number of Years: 7 years
* Number of Quarterly Payments: 7 years * 4 quarters/year = 28 payments
**3. Calculate the Present Value of the Quarterly Payments**
* **Use the Present Value of an Ordinary Annuity Formula:**
Present Value = Payment * [(1 - (1 + r)^-n) / r]
Where:
* Payment = ₱15,000
* r = Quarterly interest rate (0.025)
* n = Number of payments (28)
* **Calculate:**
Present Value = ₱15,000 * [(1 - (1 + 0.025)^-28) / 0.025]
Present Value ≈ ₱15,000 * 19.9635
Present Value ≈ ₱299,452.50
**4. Calculate the Cash Price of the Property**
* Cash Price = Down Payment + Present Value of Payments
* Cash Price = ₱150,000 + ₱299,452.50
* Cash Price = ₱449,452.50
**Therefore, the cash price of the property is approximately ₱449,452.50.**
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