SOLUTION: In return for a loan, with money worth 7% compounded semiannually, a man promises to pay $600 at the end of each 6 months for 8 years. (b) Find his remaining liability just after h
Algebra ->
Finance
-> SOLUTION: In return for a loan, with money worth 7% compounded semiannually, a man promises to pay $600 at the end of each 6 months for 8 years. (b) Find his remaining liability just after h
Log On
Question 1195215: In return for a loan, with money worth 7% compounded semiannually, a man promises to pay $600 at the end of each 6 months for 8 years. (b) Find his remaining liability just after his 6th payment. Found 2 solutions by Theo, MathTherapy:Answer by Theo(13342) (Show Source):
You can put this solution on YOUR website! here's my excel spreadsheet.
you can see that at the end of the 6th semi-annual time period, the remaining balance was $4,989.96 after the payment was made.
that's your solution.
the procedure for calculating the remaining balance at the end of each time period is:
remaining balance from the previous time period is multiplied by 1.035 to get the remaining balance in the current time period before payment is made.
payment is then subtracted to get the remaining balance in the current time period after the payment is made.
at the end of time period 5, the remaining balance was $5,400.93 after the payment was made.
multiply that by 1.035 to get 5589.96 at the end of time period 6 before the payment is made.
make the 600 payment to get 4989.96 at the end of time period 6 after the payment is made.
you first needed to find the present value of the loan for 600 dollar payment at the end of each semi-annual period for 16 semi-annual periods.
that present value = 7256.47 was the amount of the loan.
the interest rate used was 7% / 2 = 3.5% per semi-annual time period.
here are the results from the calculator at that gives you the present value of the payments which is the amount of the loan.
inputs are everything except pv.
output is pv.
You can put this solution on YOUR website! In return for a loan, with money worth 7% compounded semiannually, a man promises to pay $600 at the end of each 6 months for 8 years. (b) Find his remaining liability just after his 6th payment.
One needs to calculate the Present Value (PVoa) of an annuity with a semi-annual (2) payment of $600, an annual interest rate of 7% (.07),
and a remaining term of 5 years (8 years - 3 years, or 6 semi-annual payments).
So, we have:
Using the latter, we get:
Remaining balance after 6 semi-annual payments/3 years, or
