Find: cash value or cash price of the car Solution. The time diagram for the installment payments is given by: 16200 16200 16200 16200 2 60 The present value of this ordinary annuity is given by P =R...

Solve for the activity no.4

Extracted text: Find: cash value or cash price of the car Solution. The time diagram for the installment payments is given by: 16200 16200 16200 16200 2 60 The present value of this ordinary annuity is given by P =R (1+j)-n P = 16,200 1-(1+0.00875)-60 16,200 1-(1.00875)-60 0.00875 0.00875 P = 753,702.20 Cash value = Down payment + present value = 200,000 + 753,702.20 Cash Value = P 953,702.20 Activity 4: Give Me the Cash Value of the following ordinary annuities. Use the formula: P = R EdD"; Cash value = Down payment + present value 1. The buyer of a lot pays P 50,000 and P 10,000 every month for 10 years and is worth 8% compounded monthly. 2. Brian paid P 135,000 as down payment for a car and will pay P 18,000 every month that is worth 9% compounded monthly for 4 years. Periodic payment R of an Annuity Periodic payment R can also be solved using the formula for amount F or present value P of an annuity. F = R= F/"- P = R = P/ E where : R is the regular payment; P is the present value of an annuity F is the future value of an annuity j is the interest rate per period; n is the number of payments Example 5. Paolo borrowed P 100 000. He agrees to pay the principal plus interest onch vear for 3 years. What should be