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Suppose you borrowed $25,000 at a rate of 8% and must repay it in 4 equal installments at the end of each of the next 4 years. How large would your payments be?

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Solution Summary

The solution shows how to calculate the payment you need to repay at the end of each of the next 4 years. It is a the present value of an ordinary annuity problem.

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percentage rate question.
Suppose you borrowed $25,000 at a rate of 8% and must repay it in 4 equal installments at the end of each of the next 4 years. How large would your payments be?

PVA = W x 1 - 1 where PVA is the present value
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