Compute the amount that can be borrowed under each of the following circumstance

Question

Compute the amount that can be borrowed under each of the following circumstances (PV of $1, V of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. Round your "Table value" to 4 decimal places.) I. A promise to repay $90,000 seven years from now at an interest rate of 6%. 2. An agreement made on February 1, 2016, to make three separate payments of three $20,000 on February 1 of 2017, 2018, and 2019. The annual interest rate is 10%. on February 1 of 2017,.201820,o Option 1 Table Value Amount Present Value Loan amount Option 2 Annual payments Table Value Amount Present Value

Explanation / Answer

Option 1 Table Value Amount Present Value Loan Amount 0.6651 90000 59859 =0.6651*90000 =ROUND(1/1.06^7,4) Option 2 Table Value Amount Present Value Annual Payments 2.4869 20000 49738 =2.4869*20000 =ROUND(PV(10%,3,-1,0,0),4)

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