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    Monthly and Annual Payments

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    Please address the following questions:

    1. What is the future value of a 5 year ordinary annuity with annual payments of $200 evaluated at a 15% interest rate?

    2. You have just taken out an instalment loan for $100,000. Assume that the loan will be repaid in 12 equal monthly instalments of $9,456 and the first monthly payment will be due one month from today. How much of the third monthly payment will go toward repayment of principal?

    © BrainMass Inc. brainmass.com December 24, 2021, 8:42 pm ad1c9bdddf
    https://brainmass.com/business/annuity/monthly-annual-payments-304484

    SOLUTION This solution is FREE courtesy of BrainMass!

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    What is the future value of a 5 year ordinary annuity with annual payments of $200 evaluated at a 15% interest rate?

    n = 5
    r = 15.00%
    FVIFA(5 periods, 15.% rate ) = 6.742381
    FVIFA = Future Value Annuity Factor
    Annuity = $200.00
    Therefore, future value = $1,348.48 = 200 x 6.742381
    Answer: $1,348.48

    You have just taken out an instalment loan for $100,000. Assume that the loan will be repaid in 12 equal monthly instalments of $9,456 and the first monthly payment will be due one month from today. How much of the third monthly payment will go toward repayment of principal?

    We first need to calculate the interest rate
    We will use EXCEL worksheet function RATE
    Interest rate = 2.00% = RATE(12,-9456,100000)

    Please view the attachment for the chart pertaining to this solution.

    How much of the third monthly payment will go toward repayment of principal?
    Answer: $7,757.22

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    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    © BrainMass Inc. brainmass.com December 24, 2021, 8:42 pm ad1c9bdddf>
    https://brainmass.com/business/annuity/monthly-annual-payments-304484

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