Question

a) Jorge is deposited with $ 500,000 in a bank that pays 10% capitalizable on a biweekly basis so that, within 5 years, he receives an expired rent of $ 12,000 biweekly. Calculate the number of payments he will receive.

Answer 1

When compounded biweekly, Biweekly Interest Rate -(1+ APR/26)25 -1] / 26 (As there are 26 biweeks in a year) 0.4037% [( (1 + 10%/26) 26-1) / 26] Biweekly Interest rate, RATE Biweekly payments, PMT Amount available initially, PV $12,000 $500,000 $0 [Because all will be paid off] 0 0 if paid at the end of each period; 1 if paid at the beginning of each period 45.71 [Ref: NOTE] Balance at the end, FV Biweekly payment type, TYPE # of biweekly payments received NOTE #of biweekly payments received is calculated using EXCEL FUNCTION NPER(rate,pmt,pv,fv,type) where rate-0.4037%; pmt-12000; pV-500000; fV =0; type-0; Here, pmt is negative as it denotes cash outflow; fv is positive as it denotes cash inflow; type-0 as payments made at the end of each biweek only ((1+10%/26)26)-1)/26 (1+10%/26)25-1)/26] 1 Biweekly Interest rate, RATE $12,000 2 Biweekly payments, PMT $500,000 3 Amount available initially, PV 4 Balance at the end, FV $0 [Because all will be paid offl 5 Biweekly payment type, TYPE 0 0 if deposited at the end of each period; 1 if deposited at the beginning of each period 6 # of biweekly payments received :NPER(B1,-B2,B3,B4,B5)[Ref: NOTE]