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A small business owner visits his bank to ask for a loan. The owner states that he can repay a loan at $1,500 per month for the next three years and then $500 per month for two years after that. If the bank is charging customers 8.5 percent APR, how much would it be willing to lend the business owner?

Respuesta :

btunie33

Answer:

$56,048.70

Explanation:

Let's break the annuity into two streams of payments:  $500 monthly for five years and $1,000 for three years.  Then add the result :

PVA60 = $ 500×[1−1(1+0 . 085/12)600 .085/12] =$ 24 , 370. 59

 PVA36 =  $ 1, 000×[1−1(1+0. 085 /12)360 . 085/12]=$ 31 ,678 . 11

Therefore,

PVA60 + PVA36 = $ 24 , 370. 59 + $ 31 ,678 . 11 =$ 56 , 048 . 70

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