Chapter 12.III, Problem 19RE

### Contemporary Mathematics for Busin...

8th Edition
Robert Brechner + 1 other
ISBN: 9781305585447

Chapter
Section

### Contemporary Mathematics for Busin...

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

# Loan Payment Time Nominal Kate Present Value Payment Frequency Period (years) (%) (Amount of Loan) 19. $3,756.68 every year 10 10.6$22,500

To determine

To calculate: The amount of loan payment where payment frequency is 1 year, time duration is 10 years, nominal rate of return is 10.6% and present value amount is $22,500. Explanation Given Information: Payment frequency is 1 year, time duration is 10 years, nominal rate of return is 10.6% and present value amount is$22,500.

Formula used:

The formula to compute the amortization payment is,

Amortization payment=PV×i1(1+i)n

Where, PV is the present value, i is the interest rate per period, n is the number of periods.

Calculation:

Consider that Payment frequency is 1 year, time duration is 10 years, nominal rate of return is 10.6% and present value amount is $22,500. The rate period is 10.6% or 0.106(10.6%÷1 period per year). The number of periods is 10(10 years×1 period per year). Substitute$22,500 for present value, 0

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