Doris borrowed $5000 from a finance company at an interest of 8% quarterly. The loan is to be repaid in 3 equal payments, annually. What is the amount of the equal payment? Question 1 options: A) $1948.69 B) $1787.42 C) $1856.77 D) $1419.51 E) $1666.67

Doris borrowed $5000 from a finance company at an interest of 8% quarterly. The loan is to be repaid in 3 equal payments, annually. What is the amount of the equal payment? Question 1 options: A) $1948.69 B) $1787.42 C) $1856.77 D) $1419.51 E) $1666.67

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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Question

Doris borrowed $5000 from a finance company at an interest of 8% quarterly. The loan is to be repaid in 3 equal payments, annually. What is the amount of the equal payment?

Question 1 options:

$1948.69

$1787.42

$1856.77

$1419.51

$1666.67

Expert Solution

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Calculation of effective annual rate (r);

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Calculation of annual payment;

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