Using the compound interest tables, answer each of the following questions.Required:
a.Jane has a $35,000 bank loan that she wishes to pay off in five equal annual payments with 12% interest. If the first payment is due one year from today, what will be the amount of the annual payment necessary?b.Joan wants to borrow some money from the bank to start a small business. Joan can afford to pay off the loan in 15 annual installments of $9,500. The bank charges an annual interest rate of 12%. If Joan makes the first payment one year from the date of the loan, how much can Joan borrow?
What will be an ideal response?
| a. | Present value of an ordinary annuity when the present value is known, table approach: | |
| C | = PVO÷ Factor for POn = 5, i = 12% | |
| C | = $35,000 ÷ 3.604776 | |
| C | = $ 9,709.34 | |
| b. | Present value of an ordinary annuity when the annual payments are known, table approach: | |
| PVO | = C× Factor for POn = 15, i = 12% | |
| PVO | = $ 9,500 × 6.810864 | |
| PVO | = $64,703.21 | |
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What will be an ideal response?
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A. 
B. 
C. 
D. v
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