David Arredondo was paying for a car in monthly payments of $ 2,000 for ten years. He had already made the payments for the first two years; However, if you were involved in an accident and had to pay in advance 10 monthly payments, what will be the value of a single payment, corresponding to these 10 months of advance payments, if the interest rate is 15% convertible monthly ?
Solve the following problems without using any software, do everything in digital format, explain the formulas, substitutions and result
2. David Arredondo was paying for a car in monthly payments of $ 2,000 for ten years. He had already made the payments for the first two years; However, if you were involved in an accident and had to pay in advance 10 monthly payments, what will be the value of a single payment, corresponding to these 10 months of advance payments, if the interest rate is 15% convertible monthly ?
Present value of annuity is the current value of the future payments that are calculated using the interest rate or discount rate.
The formula of which is:
Present Value of periodic payment= P* (1- (1+r)-n)/r
Where,
P= periodic payments
r= rate of interest
n= number of period
And
Present Value of a single cash flow= Future Value / (1 + interest rate%)^n
Where,
n= number of period
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