women\'s sw shophearts Job Description tling Vaho 6 Homework Help Save&Exit; Bri

Question

women's sw shophearts Job Description tling Vaho 6 Homework Help Save&Exit; Brief Exercise 6-8 Present value; ordinary annuity [LO6-7 Canliss Mining Company borrowed money from a local bank. The note the company signed requires five annual instaliment payments of St8 000 beginning one year from today The interest rate on the note is 5%D0S1. PyotSLEVAos. eats, eaast and PVAD of ST (Use appropriate factorls) from the tables provided.) What amount did Canliss borrow? (Round your final answers to nearest whole dollar amount.) Table or Present Value 3 5 6 8

Explanation / Answer

annual installment payment = 18000

Year = 5 (annual installment)

interest rate = 5%

present value of ordinary annuity = P*[1-(1+r)^(-n)]/r

where P - annual installment

r - rate per period

n - no. of year compounded

put the values in formula

= 18000*[1-(1+0.05)^(-5)]/0.05

= 18000*[1-0.783526]/0.05

= 18000*0.216474/0.05

= 3896.539/0.05

= 77930.58

Please comment in case of further clarification requried/wrong answer.

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