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Chapter 4: 22BP (page 283)

If you owe $35,000 payable at the end of eight years, what amount should your creditor accept in payment immediately if she could earn 13 percent on her money?

Short Answer

Expert verified

The creditor should accept $13,165.60 now.

Step by step solution

01

Identification of the required information

Future value (FV) = $35,000

Periods (n) = 8

Interest Rate (i) = 13%

02

Immediate payment to be accepted by the creditor (PV)

PV=FV脳1+i-n=$35,000脳1+13%-8=$13,165.60

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Most popular questions from this chapter

Adjust the annual formula for a future value of a single amount at 12 percent for 10 years to a semiannual compounding formula. What are the interest factors (FVIF) before and after? Why are they different?

If you invest $9,000 today, how much will you have c. In 25 years at 14 percent?

How much would you have to invest today to receive a. $15,000 in 8 years at 10 percent?

What is the present value of

c. $26,000 in 14 years at 6 percent

How much would you have to invest today to receive b. $20,000 in 12 years at 13 percent?

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