Share
Explore BrainMass

Monthly and Annual Payments

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?

Solution Preview

Please see the attached file for the complete solution, formatted properly.

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 ) = ...

Solution Summary

This solution performs time value of money calculations including the future value of annuity and components of principal that go toward the repayment of principal. An Excel attachment is also included which provides the full solution with a chart which is part of the response.

$2.19