Asked by narina
Solve the problem
N#27,i#0.053,pmt#175,pv#?
N#27,i#0.053,pmt#175,pv#?
Answers
Answered by
MathMate
If you make N=27 annual payments of A=$175 with annual interest of i=0.053, the future value is
FV=A(1+R+R^2+...+R<sup>N-1</sup>)
=A(R<sup>N</sup>-1)/(R-1)
=A(R<sup>N</sup>-1)/i
where R=1+i
The present value is then
PV=FV/(R<sup>N</sup>)
=A(R<sup>N</sup>-1)/(i*R<sup>N</sup>)
I get a little over 10000.
FV=A(1+R+R^2+...+R<sup>N-1</sup>)
=A(R<sup>N</sup>-1)/(R-1)
=A(R<sup>N</sup>-1)/i
where R=1+i
The present value is then
PV=FV/(R<sup>N</sup>)
=A(R<sup>N</sup>-1)/(i*R<sup>N</sup>)
I get a little over 10000.
Answered by
MathMate
*correction
I get a little less than 2500.
I get a little less than 2500.