Question

XYZ Corp owes $128,000 to a supplier. Since it does not have that amount available to make a full payment an agreement has been reached to make equal weekly payments for one year (I.e. 52 payments) to pay off this accounts payable debt. At an APR of 4.8% what would be the weekly payments (to the n nearest dollar) necessary to pay off this debt?

$2,513

$2,704

$2,522

$2,580

Answer 1

Solution Whereas, A=Weekly payoff r=Weekly rate of Interest=4.8%/52=0.0923% n=No of period compounding is done=52 Weeks Computation of monthly deposit required for desired amount $128,000 =Ax [(1+r)^n-1] r $128,000 =Ax[(1+0.0923%)*52-1] 0.0923% $128,000 x 0.0923% = Ax[0.0491} A=$2404.1 Hence the monthly deposit required for desired amount is $507.8 Conclusion Hence the correct option is $2,513 since it is nearest to $2,404.1 Hence correct option is "$2,513"