00:01
Hello students we are going to write here you have borrowed $28 ,000 at an interest rate of 12 % compound annually each equal payment will be made over 4 year period with each payment made at the end of corresponding year what is the amount of annual payment what is the interest rate payment for the second year so in the first case we are going to write here for this so let's raise this to make it more clear so this is present value of regular annunity we are going to write here which is borrowing which must be borrowing amount so we are going to write here that must be borrowing amount that is that must be coloned to twenty eight thousand dollars so if i write here for this this is time period 4 years time period 4 years with rate of interest is 12 % compounded annually.
01:24
So we are going to apply the formula annual payment must be equivalent to pmt multiplied by 1 divided by r multiplied by 1 minus 1 upon 1 plus r multiplied by n so we are going to close the bracket so let's correct the formula this must be something like this this must be raised to power n so now let's solve and put all the values so annual payment we are going to find so this is so equal annual payment we need to find so this is annual payment for four years this is bmd we are going to to find 1 divided by 1 .2 12 % so this must be if i write here for this this is 1 .2 multiplied by 1 minus 1 upon 0 .2 so 1 .2 we are going to write here this must be so let's correct this 2 this must be 12 % so 0 .12 must be correct and this is 1 .12 raise 2 power 1 .12 to power 4 if i write here for this so this must be calculated as 28 ,000 pmt this is 1 divided by 0 .1 2 and this whole value we need to calculate so this must be 1 minus 0 .636 so we are going to write here this is 28 ,000 is equivalent to pmt multiplied by 0 .6 0 .364 divided by 0 .12.
03:13
0 .364 divided by 0 .12, we are going to write here for this.
03:20
This is 28 ,000 divided by 3 .0 .3.
03:25
3 .03, which is 28 ,000 divided by 3 .03.
03:32
So we are going to write here.
03:34
This is dollars to 924 .92 .92 .9.
03:38
So finally we are going to write here for this what is the amount of annual payment? hence amount of annual payment is dollars 924 .92 and if i write here this is going to be our final answer.
04:04
In the first case now we are going to find b part so now if i write here for this we need to write for the second case for first year, first year, installment, if i write here for this, 924 .92 if i write here for this...
