Janet's parents want her to go to the same college that they did. They decided to pay a lump sum payment today of $161000 so she will be able to make 4 years of quarterly withdrawals. The college provide an annuity of 3%, compounded quarterly. If Janet will make her first withdrawal in 10 years, what is the size of each withdrawal?

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A: Formula:

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A: Given information: Future value is $150,000 APR is 7% Number of years is 6

Cost of Credit

The cost of credit is an extra amount that the borrower has to pay besides the loan amount. These credit charges may vary from loan to loan. The cost of credit includes interest charges, maintenance charges, and arrangement charges. Some of the costs are mandatorily collected by the lender based on the loan amount and tenure of the loan. The cost of credit is also called finance charges of the credit.