Nico makes annual end-of-year payments of $5,043.71 on a four-year loan with an interest rate of 13 percent. The original princi

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1 year ago

8

pal amount was ________.

1 answer:

natita [175] · Answer 1 · 2024-03-13T09:48:35+03:00

We need to find the principal amount on an interest rate of 13% where the end of year payment is $5043.71.

The original amount is $\$15002.37$ .

i = Interest rate = 13%

n = Compounding period = 4 years

E = End of year payment = $5043.71

The required formula is

$P=\dfrac{E[1-(1+i)^{-n}]}{i}\\\Rightarrow P=\dfrac{5043.71[1-(1+0.13)^{-4}]}{0.13}\\\Rightarrow P=\$15002.37$

The original principal amount was $\$15002.37$ .

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