Most consistent with time value of money principles

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Reference no: EM131993122

Ben is buying a car for $15,000. If Ben wants to make four annual payments and the interest rate is 7%, which of the following is most consistent with time value of money principles if interest is compounded monthly?

(a) The annual payment can be calculated by applying the annuity formula to find forty eight equal monthly payments and then multiplying each payment times 12

(b) The annual payment equals $15,000 divided by 4

(c) Ben will have more than enough money to make his payments if he invests $15,000 in time 0 in an investment that earns 7% compounded monthly

(d) None of the above is consistent

PLEASE ANSWER AND EXPLAIN ANSWER

Reference no: EM131993122

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