A loan of $47,000 calls for payments of $2,700 at the end of every three months until the debt is settled. At an interest rate of 14% compounded semi-annually, how many payments will be made?

Question

Quizplus · Accepted Answer

To find the number of payments, we first need to calculate the effective quarterly interest rate from the given semi-annual rate. The semi-annual rate is 7% (14% annually), so the effective quarterly rate is approximately 3.4483%. Using the formula for the present value of an annuity, we solve for the number of payments (n) that equates the present value of the annuity to the loan amount. Solving this gives approximately 27 payments.

A Loan of $47,000 Calls for Payments of $2,700 at the End