Otto Co. borrows money on April 30, 2016, by promising to make four payments of

Question

Otto Co. borrows money on April 30, 2016, by promising to make four payments of $13,000 each on November 1, 2016; May 1, 2017; November 1, 2017, and May 1, 2018. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. Round your answers to nearest whole dollar. Round "Table Factor" to 4 decimals.) 1. How much money is Otto able to borrow if the interest rate is 8%, compounded semiannually? Periodic Cash Flow Table Factor -Present Value 2. How much money is Otto able to borrow if the interest rate is 12%, compounded semiannually? Periodic Cash Flow Table FactorE Present Value

Explanation / Answer

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Periodic Cash Flow x Table Factor = Present Value $ 13,000 3.6299 $ 47,188.70

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