What is the present worth for amelia of alternatives

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Reference no: EM132002090

After shopping for a car Amelia ended up borrowing $14300 from her grandparents at 7% per year compounded annually with repayment at the end of 5 years. Her Grandparents asked her to develop some alternative repayment options.

If Amelia's TVOM is 10%, what is the present worth for Amelia of each of the following 3 alternatives?

1) Interest only at the end of each year and principal at the end of the fifth year. $____

2) Equal annual payments. $ ____

3) Pay the principal and interest in one lump sum after 5 years? $ ____

If Amelia's TVOM is 4%, what is the present worth for Amelia of each of the following 3 alternatives?

1) Interest only at the end of each year and principal at the end of the fifth year. $____

2) Equal annual payments. $____

3) Pay the principal and interest in one lump sum after 5 years? $____

Reference no: EM132002090

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