Paul's Painting Co.acquired a new $800, 000 press on April 1, 2010.Paul's will make six equal payments based upon 8% compound interest, starting on March 31, 2011.How much will each payment be?
A)$504, 136
B)$173, 056
C)$160, 234
D)$109, 052

Question

Quizplus · Accepted Answer

The correct answer is found by calculating the payment for an amortizing loan using the formula for the present value of an annuity. Given the principal amount ($800,000), the annual interest rate (8%), and the number of payments (6), the payment amount can be calculated using financial calculators or spreadsheet software designed for such financial computations. The result is $173,056, which represents the equal payment amount that will satisfy the loan terms under the given conditions.