Chapter 4, Problem 25PROB

Summary Introduction

N has taken 5-year loan of $32,000 at 3% interest compounded monthly.

Present value of an annuity is the current value of future payment or the present value of a series of future periodic payments made at the end of each payment period.

$PV=PMT\left[\frac{1-\frac{1}{{\left(1+r\right)}^n}}{r}\right]$

Here,

The present value is “PV”.

The periodic payments are “PMT”.

The interest rate is “r”.

The maturity period of number of years is “n”.