Industrial tools owes you $38,600. this amount is seriously delinquent so you have offered to accept weekly payments for one year at an interest rate of 3 percent to settle this debt in full. what is the amount of each payment?

Question

Josiah Mcintyre

Business

15 June, 12:27

Industrial tools owes you $38,600. this amount is seriously delinquent so you have offered to accept weekly payments for one year at an interest rate of 3 percent to settle this debt in full. what is the amount of each payment?

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Answers (1)

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Jade Wyatt · Answer 1

The problem could be solved by using the future value (FV) formula: FV = PV * (1 + r) ⁿ, where;

PV = Present value

r = interest rate

n period

So, substituting the formula with the value:

FV = $38,600 * (1 + (.03:52)) ⁵²

≈ $39,775.20

Note that the interest is divided by 52 since it has to be compounded weekly.

So, the weekly payment will amount to $764.91 ($39,775.20:52).