Present value of a loan

Business & Finance
Tutor: None Selected Time limit: 1 Day

What is the present value of a loan that calls for the payment of $500 per year for six years if the discount rate is 10 percent and the first payment will be made one year from now? How would your answer change if the $500 per year occurred for ten years? Please provide the formula that you used.

Aug 16th, 2015

Thank you for the opportunity to help you with your question!

FORMULA FOR COMPOUND INTEREST

A=P(1+r/n)^n.t

=500(1+0.1/1)^6

=500(1.1)^6

=$2.7680e16

It it happens for 10years

=2.53295e27

Please let me know if you need any clarification. I'm always happy to answer your questions.
Aug 16th, 2015

I am assuming that the . between the 2 and 7  in $2.7680e16 should be a , is that correct? What is the e16 and e27 for?

Aug 16th, 2015

The problem is the calculator am using because my scientific one has spoiled. Please insert the following in your calculator please

a).550^6

b)550^10 to get answers without e

Aug 16th, 2015

Now you have totally lost me. I don't have a calculator with that symbol.

Aug 16th, 2015

This (^) simply means raised to or to the power of that number. For example 550^6 is same as 550*550*550*550*550*550

Aug 16th, 2015

It seems you were using the wrong formula. Spoke to a tutor at the university who got me on the right track. Thanks for the effort.

Aug 16th, 2015

welcome

Aug 16th, 2015

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