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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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Cash Flow Amounts R. Lee Rouse borrows $10,000 that is to be repaid in 24 equal monthly installments payable at the end of each subsequent month with interest at the rate of 1½% per month.

Required:

Using the appropriate table, calculate the equal installments.

To determine

Determine the equal monthly installments.

Explanation

Annuity: An annuity is referred as a sequence of payment of fixed amount of cash flows that occurs over the equal intervals of time.

Determine the amount of equal monthly installments, using present value of ordinary annuity formula.

PVO=Cash flow×(pOn,i)$10,000=Cash flow×(pOn=24,i=1.5%)$10,000=Cash flow×20

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