Mary is planning to repay a debt of 50,000 with a quarterly payment $2,400 for the next 23 quarters and a final payment of "X" dollars at the end of 24-th quarter. If the interest rate is 12% per year, compounded quarterly, how much will be Mary's final payment?

Question

Quizplus · Accepted Answer

The future value of the 23 quarterly payments of $2,400 at 12% compounded quarterly is:FV = $2,400 * ((1 + 0.12/4)^23 - 1) / (0.12/4) = $46,574The present value of the final payment of X dollars at 12% compounded quarterly for 24 quarters is:PV = X / (1 + 0.12/4)^24 = $21,426Therefore, the final payment should be $21,426.

Mary Is Planning to Repay a Debt of 50,000 with a Quarterly