Question

You took out a student loan in college and now have to pay $1,600 every year for 10 years, starting one year from now. The annual interest rate on the loan is 4%.

Attempt 1/5 for 10 pts.

Part 1

What is the present value of the 10 yearly payments?

Answer 1

Present value of the 10 yearly payments = $12,977.43

Explanation;

fox J14 A B C Annual Year Payments Calculation Present value 1 $1,600 $1600/ (10.04 1 $1,600 $1600 / (10.04 2 $1,600 $1600 / (1 0.04 3 $1,600 $1600 (1 0.04) 4 $1,600 $1600/ (1 + 0.04)^5 $1,600 $1600 / (1 0.04)^6 $1,600 $1600 (10.04A7 $1,600 $1600/ (10.04^8 $1,600 $1600 / (1 0.04)^9 $1,600 $1600/ (1 + 0.04)^10 $1,538.46 $1,479.29 $1,422.39 $1,367.69 $1,315.08 $1,264.50 $1,215.87 $1,169.10 $1,124.14 $1,080.90 1 2 2 3 5 5 6 7 7 8 9 10 10 11 12 13 Total present value $12,977.43 X LO CON CO OX t un