Ask Question
BusinessBusiness
28 October, 02:31

A friend wants to borrow money from you. He states that he will pay you $4,100 every 6 months for 9 years with the first payment six months from today. The interest rate is an APR of 6.4 percent with semiannual compounding. What is the value of the payments today

+4
Answers (1)
  1. 28 October, 02:58
    0
    The value of the payment today is $ 55,447.61

    Explanation:

    A series of equal periodic payments or receipts made for certain number of period is known as annuity.

    To determine the worth of such cash flows, we discount the cash flows at a the given interest rate using the formula below:

    PV = (1 - (1+r) ^ (-n)) / r * Cash flows

    r - rate per period, n - number of periods, PV - present value

    Value of the payments today:

    r = 6.4%/2 = 3.2%

    n = 9 * 2 = 18, (there are 2 six months in a year)

    PV = (1 - (1.032) ^ (-18)) / 0.032) * 4,100

    PV = 13.5238 * 4,100

    PV = $ 55,447.61

    The value of the payment today is $ 55,447.61
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “A friend wants to borrow money from you. He states that he will pay you $4,100 every 6 months for 9 years with the first payment six months ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers
You Might be Interested in
Which aspect of marketing (branding, promotion, or market research) is the most important for companies to consider when doing business in the global economy, and why? Write one or two paragraphs to respond to this question.
Answers (1)
What are the major distinctions between a two year college and a four year college
Answers (1)
g On July 1 the Swifty Corporation paid $18240 to Acme Realty for 6 months rent beginning July 1. Prepaid Rent was debited for the full amount.
Answers (1)
Which of the following statements concerning product costs is correct? A. Period costs are only expensed when a related unit of product is sold. B. Product costs are initially inventoried on a company's Balance Sheet. C.
Answers (1)
Phillips Company acquires all of the outstanding stock of Sylvania Company by issuing 20,000 shares of its own $5 par value stock. The market value of its stock at the date of issuance was $50 a share.
Answers (1)
New Questions in Business
Masks Inc. is a cosmetics company that makes beauty products. It uses whale oil from dead whales only and does not kill whales to obtain blubber. A newspaper publishes a report stating that Masks Inc.
Answers (1)
Transfer payments are not included in gdp calculation because these are
Answers (1)
In which year were tobacco commercials banned from network television in the united states?
No Answers
Maggie's manager notices that she exhibits an external locus of control when she speaks about her work. Her manager should Group of answer choices a. direct Maggie toward a job with more autonomy. b.
Answers (1)
Consider this argument: "The kidnappers have taken eight people hostage and are holding them at a farmhouse just outside town. If the SWAT team assaults the farmhouse, the hostages could be killed.
Answers (1)
Home » Business » A friend wants to borrow money from you. He states that he will pay you $4,100 every 6 months for 9 years with the first payment six months from today. The interest rate is an APR of 6.4 percent with semiannual compounding.
Sign Up Forgot Password?