5. Kehoe, Inc. owes $30,000 to Ritter Company today. How much would Kehoe have to pay each year if the debt is retired through four equal payments (made at the end of the year), given an interest rate on the debt of 12%?

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Business

Yaretzi Benitez

1 June, 03:36

5. Kehoe, Inc. owes $30,000 to Ritter Company today. How much would Kehoe have to pay each year if the debt is retired through four equal payments (made at the end of the year), given an interest rate on the debt of 12%?

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Answers (1)

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Amani Brady · Answer 1

P = 9,877.30

Explanation:

he applicable formula for this annuity calculation is as below. the intention is the get an annuity payable at the end of each year

P = PV x r

1 - (1+r) - n

P is the yearly amount

PV is the present value, $30,000

r is interest rate 12 % or 0.12 %

n is four years

P = 30,000 x 0.12

1 - (1+0.12) - 4

P = 30,000 x 0.12

1 - 0.6355180

P = 30,000 x 0.32923436

P = 9,877.30