A Company borrowed money from a local bank. The note the company signed requires five annual installment payments of $11,500 not due for three years. The interest rate on the note is 7%. What amount did the company borrow? Note: Use tables, Excel, or a financial calculator. Round your intermediate and final answers to nearest whole dollar amount. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Step 1: Calculate the PV of the Ordinary Annuity Component: Payment: n = Present Value: j= Present Value: Step 2: Convert the Annuity to a Single Sum: Payment: n = $ $ 11,500 5 7% 47,152
A Company borrowed money from a local bank. The note the company signed requires five annual installment payments of $11,500 not due for three years. The interest rate on the note is 7%. What amount did the company borrow? Note: Use tables, Excel, or a financial calculator. Round your intermediate and final answers to nearest whole dollar amount. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Step 1: Calculate the PV of the Ordinary Annuity Component: Payment: n = Present Value: j= Present Value: Step 2: Convert the Annuity to a Single Sum: Payment: n = $ $ 11,500 5 7% 47,152
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:A Company borrowed money from a local bank. The note the company signed requires five annual
installment payments of $11,500 not due for three years. The interest rate on the note is 7%.
What amount did the company borrow?
Note: Use tables, Excel, or a financial calculator. Round your intermediate and final answers to nearest
whole dollar amount. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1)
Step 1: Calculate the PV of the Ordinary Annuity Component:
Payment:
$
n =
Present Value:
Step 2: Convert the Annuity to a Single Sum:
Payment:
Present Value:
n =
i =
$
NEVE
11,500
5
7%
47,152
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