Cooley Landscaping needs to borrow $35,000 for a new front-end dirt loader. The
ID: 2795655 • Letter: C
Question
Cooley Landscaping needs to borrow $35,000 for a new front-end dirt loader. The bank is willing to loan the money at 4% interest for the next 7 years with semiannual compounding (payments). What is Cooley's periodic payment for the loan? What is Cooley's payment for the loan at 4% interest for the next 7 years with semiannual payments? (Round to the nearest cent. Make sure you enter your answer using commans to separa thousands, do not enter a $ sign, and use two decimals. E.g. if your answer is $1,000 then you enter 1,000.00) Expert Enter your answer in the answer box and then click Check Answer Clear A esc F888 FI F5 4Explanation / Answer
Principal 35000 Rate of interest 4 % p.a. or 2% semi annual Maturity 7 years or 14 semi annual periods The payments are compounded semiannually the only payment to be made is at the end of year 7 Period Beginning Principal Interest Payment Balance principal (outstanding balance X 2%) 1 35000 700 0 35700 2 35700 714 0 36414 3 36414 728.28 0 37142.28 4 37142.28 742.8456 0 37885.13 5 37885.13 757.7025 0 38642.83 6 38642.83 772.8566 0 39415.68 7 39415.68 788.3137 0 40204 8 40204 804.08 0 41008.08 9 41008.08 820.1616 0 41828.24 10 41828.24 836.5648 0 42664.8 11 42664.8 853.2961 0 43518.1 12 43518.1 870.362 0 44388.46 13 44388.46 887.7693 0 45276.23 14 45276.23 905.5246 46181.76 0 If he makes semiannual payments = Semiannual payment = 35000/PVAF(2%,14) = 2891.069 Period Beginning Principal Interest Payment Balance principal (outstanding balance X 2%) 1 35000 700 2891.069 32808.93 2 32808.93 656.1786 2891.069 30574.04 3 30574.04 611.4808 2891.069 28294.45 4 28294.45 565.8891 2891.069 25969.27 5 25969.27 519.3855 2891.069 23597.59 6 23597.59 471.9518 2891.069 21178.47 7 21178.47 423.5694 2891.069 18710.97 8 18710.97 374.2194 2891.069 16194.12 9 16194.12 323.8825 2891.069 13626.94 10 13626.94 272.5387 2891.069 11008.41 11 11008.41 220.1681 2891.069 8337.505 12 8337.505 166.7501 2891.069 5613.187 13 5613.187 112.2637 2891.069 2834.381 14 2834.381 56.68763 2891.069 0 Please provide feedback……... thanks in advance……… :-)