A developer wants to buy a certain parcel of land. The developer feels she can afford payments of $26,000 each half-year for the next 6 years. How much can she borrow and hold to this budget at an annual rate of 7.2% compounded semianually? Round your answer to the nearest cent.
A)$413,166.55
B)$249,774.48
C)$558,705.90
D)$615,256.64
E)$138,088.45

Question

A developer wants to buy a certain parcel of land. The developer feels she can afford payments of $26,000 each half-year for the next 6 years. How much can she borrow and hold to this budget at an annual rate of 7.2% compounded semianually? Round your answer to the nearest cent. ​
A)$413,166.55
B)$249,774.48
C)$558,705.90
D)$615,256.64
E)$138,088.45

Quizplus · Accepted Answer

The present value of an annuity formula is used to calculate how much can be borrowed: PV = PMT × [(1 - (1 + r)^-n) / r], where PMT = $26,000, r = 0.072/2, and n = 6*2. This results in approximately $249,774.48.

A Developer Wants to Buy a Certain Parcel of Land