Question

Canliss Mining Company borrowed money from a local bank. The note the company signed requires five annual installment payments of $16,500 not due for three years. The interest rate on the note is 7%. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) What amount did Canliss borrow? (Do not round intermediate calculations. Round your final answers to nearest whole dollar amount.)

Answer 1

Answer:

Canliss borrow 43,301.21 dollars.

Explanation:

we need to solve for the present value of a ordinary annuity of 16,500 for three years discounted at 7%

$C \times \frac{1-(1+r)^{-time} }{rate} = PV$

C $ 16,500

time: 3 years

rate: 0.07

$16500 \times \frac{1-(1+0.07)^{-3} }{0.07} = PV$

PV $43,301.2147