The new iPhone 14 was released last week. You need a P12,000 immediately as a down payment on this phone. Suppose that you can borrow this money from an insurance company. You must repay the loan in equal payments every six months over the next eight years. The nominal interest rate being charge is 7% compounded continuously. What is the amount of each payment? Add your answer

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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6. Please use the formula to solve the problem
Legend:
Cc - Capitalized Cost (Currency)
Fc - First Cost (Currency)
Mc - maintenance Cost (Currency)
Rc - Replacement Cost (Currency); if no Re: Re Fe
Sy- Salvage Value (Curency); if no Sy: Sy = 0
A - Periodic Amount (Currency)
F-Future Value (Currency)
G - Periodic Amount Increment Amount (Currency)
P - Present Value (Currency)
g - Periodic Amount Increment Rate (Persentage)
i-Nominal Interest Rate (Percent)
m - Number of Periods per Year (Number)
r - Effective Interest Rate (Percent)
t-Number of Years (Number)
Formulae:
Compounding Transformation (i, (m₂)→ 1₂ (m₂)): (1 + ) = (1 +)**
Perpetuity (t=00):
Ordinary Annuity (Payment at End of Period):
P=A1-(1+1)-²)
Arithmetic Gradient:
Geometric Gradient:
Capitalized Cost:
n = mt
Annuity Due (Payment at Beginning of Period):
r=-
m
F = P(1+r)"
P = F(1+r)-R
F=A
F=A
= A ((1+r)^²-1)
F=
P=A (1-(1+r)^)(1+r)
= A (¹ + r)² - 1) (1 + r)
T
FA[(1+r)-1]G[-nr + (1+r)" - 1]
T
r2
A[(1+r)"-(1+g)"]
T-9
Rc-Sv
Cc=Fc++ (1+r)"-1
A = Cer
Transcribed Image Text:Legend: Cc - Capitalized Cost (Currency) Fc - First Cost (Currency) Mc - maintenance Cost (Currency) Rc - Replacement Cost (Currency); if no Re: Re Fe Sy- Salvage Value (Curency); if no Sy: Sy = 0 A - Periodic Amount (Currency) F-Future Value (Currency) G - Periodic Amount Increment Amount (Currency) P - Present Value (Currency) g - Periodic Amount Increment Rate (Persentage) i-Nominal Interest Rate (Percent) m - Number of Periods per Year (Number) r - Effective Interest Rate (Percent) t-Number of Years (Number) Formulae: Compounding Transformation (i, (m₂)→ 1₂ (m₂)): (1 + ) = (1 +)** Perpetuity (t=00): Ordinary Annuity (Payment at End of Period): P=A1-(1+1)-²) Arithmetic Gradient: Geometric Gradient: Capitalized Cost: n = mt Annuity Due (Payment at Beginning of Period): r=- m F = P(1+r)" P = F(1+r)-R F=A F=A = A ((1+r)^²-1) F= P=A (1-(1+r)^)(1+r) = A (¹ + r)² - 1) (1 + r) T FA[(1+r)-1]G[-nr + (1+r)" - 1] T r2 A[(1+r)"-(1+g)"] T-9 Rc-Sv Cc=Fc++ (1+r)"-1 A = Cer
The new iPhone 14 was released last week. You need
a P12,000 immediately as a down payment on this
phone. Suppose that you can borrow this money
from an insurance company. You must repay the loan
in equal payments every six months over the next
eight years. The nominal interest rate being charge is
7% compounded continuously. What is the amount of
each payment?
Add your answer
Transcribed Image Text:The new iPhone 14 was released last week. You need a P12,000 immediately as a down payment on this phone. Suppose that you can borrow this money from an insurance company. You must repay the loan in equal payments every six months over the next eight years. The nominal interest rate being charge is 7% compounded continuously. What is the amount of each payment? Add your answer
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