# 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?

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## SOLUTION This solution is **FREE** courtesy of BrainMass!

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 ) = 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

Thanks for using BrainMass.

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