we able to make $5000 monthly payments from your very first payment, instead of
ID: 2741473 • Letter: W
Question
we able to make $5000 monthly payments from your very first payment, instead of making the require minimum payments Assume you will make monthly payments beginning at the end of the first monthly after you borrow the $150000. We will figure out the value of N later. i) what is the future value of your first $5000 monthly payment? ii) what is the future value of your second $5000 monthly payment? iii)so, what is the future value of your 3rd monthly payment? V)find total future value of the first K monthly payments?
Explanation / Answer
i) FV = PV (1 + R)N
Where, R = rate of interest per period & N = number of periods, In the present case N = 1
FV = 5,000 (1 + R)1
ii) FV = PV (1 + R)N
Where, R = rate of interest per period & N = number of periods, In the present case N = 2
FV = 5,000 (1 + R)2
iii)FV = PV (1 + R)N
Where, R = rate of interest per period & N = number of periods, In the present case N = 3
FV = 5,000 (1 + R)3
v) Future value of first K monthly payment;
FV = 5,000 (1 + R)1 + 5,000 (1 + R)2 + 5,000 (1 + R)3 + - - - - - - - - - - - - - - + 5,000 (1 + R)K
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