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Ksivusya
2 months ago
9

Candy purchases a new guitar costing $5,500. She put down 15% and finance the rest for 3 years through the store. The store will

charge her 10% per year compounded quarterly.
Identify the type of problem.
Present Value with compound interest
Future V alue of an Annuity
Present V alue of an Annuity
Amortization
Sinking Fund
What are her quarterly payments?
a. $469.67
b. $502.35
c. $455.75
d. $406.60
e. $488.80
Business
1 answer:
harina [3.8K]2 months ago
5 0

Answer:

c. $455.75

Explanation:

The calculations for the quarterly payments are as follows:

= Remaining balance ÷ PVIFA factor for 2.5% over 12 years

Here,

Remaining balance is

= $5,500 - $5,500 × 15%

= $5,500 - $825

= $4,675

And the PVIFA factor for 2.5% across 12 years is 10.2578.

Refer to the PVIFA table.

<pthus the="" quarterly="" payment="" amounts="" to="">

= $4,675 ÷ 10.2578

= $455.75

Considering quarterly payments, the rate is divided by four and the time frame becomes four times as long.

</pthus>
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