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Lelu [443]
2 years ago
9

Candy purchases a new guitar costing $5,500. She put down 15% and finance the rest for 3 years through the store. The store will

charge her 10% per year compounded quarterly.
Identify the type of problem.
Present Value with compound interest
Future V alue of an Annuity
Present V alue of an Annuity
Amortization
Sinking Fund
What are her quarterly payments?
a. $469.67
b. $502.35
c. $455.75
d. $406.60
e. $488.80
Business
1 answer:
Umnica [9.8K]2 years ago
5 0

Answer:

c. $455.75

Explanation:

The computation of the  quarterly payments is shown below:

= Balance amount ÷ PVIFA  factor for 2.5% at 12 years

where,

Balance amount is

= $5,500 - $5,500 × 15%

= $5,500 - $825

= $4,675

And the PVIFA  factor for 2.5% at 12 years is 10.2578

Refer to the PVIFA table

So, the quarterly payments is

= $4,675 ÷  10.2578

= $455.75

In the case of quarterly payments, the rate is one fourth and time period would be 4 times

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