Petra borrowed $12,500 thirty months ago from a lender who charges interest of 4

Question

Petra borrowed $12,500 thirty months ago from a lender who charges interest of 4.05 percent compounded monthly. She wants to borrow $10,000 more today. The original lender will not increase her loan, so she has found a new lender who will allow her to borrow enough to pay off her existing loan plus the additional amount she wants. The new lender will charge interest of 4.27 percent compounded quarterly. Petra wants to pay off the new loan with three payments. The first payment will be made in fourteen months. The second payment will be made twenty-seven months from today and will be twice the size of the first payment. The third payment will be 21?2 times the size of the first payment and will be made in 31?2 years. Determine the amounts Petra will pay under this arrangement.

Explanation / Answer

Wow lots of numbers, but no worries. Lets see... Payments x =14 months 2x= 27 months 2.5x=42 months Owes $12,500+$10,000 Debt plus interest over 3.5 years = $26,106.21 Find value of x now. x+2.5x+2x=$26,106.21 x=$4,746.58 Payments values 1.$4,746.58 2.$9.493.16 3.$11,866.45 Hope this helps, best of luck. :)

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.