Best Ribs wishes to pay off a debt of $40,000 in 7 years. What amortization payment would they need to make each six months, at 6% interest compounded semiannually? (Use Table 12-2 from your text)

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The correct answer is A. $3,541.05.To calculate the amortization payment, we can use the formula:PMT = PV * (r / (1 - (1 + r)^(-n)))where:PMT is the amortization paymentPV is the present value of the debtr is the interest rate per periodn is the number of periodsIn this case, the present value of the debt is $40,000, the interest rate is 6% compounded semiannually, so r = 0.06 / 2 = 0.03, and the number of periods is 7 * 2 = 14.Plugging these values into the formula, we get:PMT = 40,000 * (0.03 / (1 - (1 + 0.03)^(-14)))PMT = 40,000 * (0.03 / (1 - 0.558394))PMT = 40,000 * (0.03 / 0.441606)PMT = $3,541.05Therefore, the amortization payment that Best Ribs would need to make each six months is $3,541.05.

Best Ribs Wishes to Pay Off a Debt of $40,000