question archive 2) Calculate the fair market value (FMV) three years from today of a payment stream of equivalent payments of $300 at the end of each month at an interest rate of 2% compounded monthly
2) Calculate the fair market value (FMV) three years from today of a payment stream of equivalent payments of $300 at the end of each month at an interest rate of 2% compounded monthly
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2) Calculate the fair market value (FMV) three years from today of a payment stream of equivalent payments of $300 at the end of each month at an interest rate of 2% compounded monthly.
FMV$=
3) A loan of $30,000 will be paid off by making equal sized payments of $450 at the end of each quarter. If the loan earns interest at a rate of 2.5% compounded quarterly, determine how many years it will take to pay off the loan.
n= ____________ equal sized payments
t= _____________ years
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REQUIRED:
Problem 2: Calculate the fair market value (FMV)
TOTAL Fair Market Value = $882
Problem 3: Determine how many years it will take to pay off the loan.
Total equal sized payments (n) = $29,550
Total years (t) = 1.03
Step-by-step explanation
REQUIRED:
Problem 2: Calculate the fair market value (FMV)
To calculate: Total Payments multiplied to Number of Periods and then deducted to Interest Rate.
Thus,
| Total Payments | $300 |
| Multiplied by: Number of Periods | 3 years |
| Total | $900 |
| Deducted to: Interest Rate |
2% |
| TOTAL Fair Market Value |
$882 |
Problem 3: Determine how many years it will take to pay off the loan.
| Total Loan | $30,000 |
| Deducted to: Total Payments |
450 |
| Total equal sized payments (n) |
$29,550 |
| Total equal sized payments |
$29,550 |
| Divided by: Total Value ($29,550 - 2 5%) |
28,811.25 |
| Total years (t) | 1.03 |
