   Chapter 12, Problem 31AT ### Contemporary Mathematics for Busin...

8th Edition
Robert Brechner + 1 other
ISBN: 9781305585447

#### Solutions

Chapter
Section ### Contemporary Mathematics for Busin...

8th Edition
Robert Brechner + 1 other
ISBN: 9781305585447
Textbook Problem

# Amortization payment Loan Payment Time Nominal Present Value Payment Frequency Period (years) Rate (%) (Amount of Loan) 31. every 6 month 2 1 2 12.0 $10,400 To determine To calculate: The amount of loan payment when payment frequency is 6 months, the time duration is 2.5 years, the nominal rate of return is 12% and present value amount is$10,400.

Explanation

Given Information:

Payment frequency is 6 months, the time duration is 2.5 years, the nominal rate of return is 12% and present value amount is $10,400. Formula used: The formula for future value of the ordinary annuity is, FV=Pmt×(1+i)n1i Here, FV is the future value, Pmt is the Annuity payment, i is the interest rate per period (nominal rate ÷ periods per year) and n is the number of periods (years × periods per year). Calculation: Consider that payment frequency is 6 months, the time duration is 2.5 years, the nominal rate of return is 12% and present value amount is$10,400.

The rate period is 6% or 0.06(12%÷2 period per year).

The number of periods is 5(2.5 years×2 period per year)

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