After shopping for a car Amelia ended up borrowing $14300 from her grandparents at 7% per year compounded annually with repayment at the end of 5 years. Her Grandparents asked her to develop some alternative repayment options.
If Amelia's TVOM is 10%, what is the present worth for Amelia of each of the following 3 alternatives?
1) Interest only at the end of each year and principal at the end of the fifth year. $____
2) Equal annual payments. $ ____
3) Pay the principal and interest in one lump sum after 5 years? $ ____
If Amelia's TVOM is 4%, what is the present worth for Amelia of each of the following 3 alternatives?
1) Interest only at the end of each year and principal at the end of the fifth year. $____
2) Equal annual payments. $____
3) Pay the principal and interest in one lump sum after 5 years? $____