What Amortization Payment Would You Need to Make Each Year

question 42

Multiple Choice

What amortization payment would you need to make each year, at 14% interest compounded semiannually, to pay off a loan of $24,000 in 4 years? (Use Table 12-2 from your text)

• A) $5,000.00
• B) $4,086.45
• C) $4,019.23
• D) $954.22

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Definitions:

Perpetuity

Perpetuity refers to a type of annuity that pays a consistent amount of income to an individual indefinitely.

Compounded Quarterly

Interest calculation method where the interest is computed and added to the principal every quarter, impacting the total interest earned or paid.

Perpetuity

An annuity that pays a set amount indefinitely, without an end.

Ordinary Perpetuity

A type of annuity that pays a fixed amount to an investor at regular intervals indefinitely.