IN ORDER TO PURCHASE A LAPTOP AT $2,450, YOU AGREE TO MAKE THE FOLL...

Question

8. In order to purchase a laptop at $2,450, you agree to make the following payments: $500 today, $650 in one year, X in two years, and $800 in three years. The annual interest rate is 6%. What is X? A) $500.00 B) $612.50 C) $665.10 D) $747.30 E) $851.34 Answer D PV = $2,450 = $500 + $650 x (1.06)-1 + X x (1.06)-2 + $800 x (1.06)-3 Î X x (1.06)-2 = $665.10 Î X = $747.30

Answer

8. In order to purchase a laptop at $2,450, you agree to make the following payments: $500 today, $650 in one year, X in two years, and $800 in three years. The annual interest rate is 6%. What is X? A) $500.00 B) $612.50 C) $665.10 D) $747.30 E) $851.34 Answer D PV = $2,450 = $500 + $650 x (1.06)-1 + X x (1.06)-2 + $800 x (1.06)-3 Î X x (1.06)-2 = $665.10 Î X = $747.30

IN ORDER TO PURCHASE A LAPTOP AT $2,450, YOU AGREE TO MAKE THE FOLL...

8. In order to purchase a laptop at $2,450, you agree to make the following payments:

$500 today, $650 in one year, X in two years, and $800 in three years. The annual

interest rate is 6%. What is X?

A) $500.00

B) $612.50

C) $665.10

D) $747.30

E) $851.34

Answer D

PV = $2,450 = $500 + $650 x (1.06)

+ X x (1.06)

+ $800 x (1.06)

Î X x (1.06)

= $665.10 Î X = $747.30

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