What amount can you borrow if you make seven semiannual payments of $4,000 at an 8% annual rate of interest? (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)
A) $28,000.00
B) $25,760.00
C) $31,049.00
D) $24,008.40
E) $35,691.20
D) $24,008.40
Explanation: An 8% annual interest rate = 4% semiannually
The PV factor on the Present Value of an Annuity table when n = 7 and i = 4% is 6.0021.
Present Value of an Annuity = Annuity * PV Factor
Present Value of an Annuity = $4,000 * 6.0021 = $24,008.40
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