Asked by Mitchell Balmas on Jul 15, 2024
Verified
Michaela is supposed to pay $15,000 to Mahmoud, but due to financial constraints, has to be delayed by one quarter. Determine the future amount if the rate of interest is 11.45%
A) $14,618.43
B) $14,727.31
C) $15,429.38
D) $15,631.42
E) $17,727.66
Interest Rate
The segment of a loan that is applied as interest to the borrower, frequently described as an annual percentage of the unsettled loan.
Future Amount
The value of an investment or loan at a specified time in the future, calculated by applying interest rates or growth factors.
- Determine the fiscal value of delayed or advanced payments, taking into account the cost of capital.
Verified Answer
OZ
Orycia ZelemJul 19, 2024
Final Answer :
C
Explanation :
To find the future amount Michaela will pay Mahmoud after one quarter at an interest rate of 11.45%, we use the formula for future value: FV = PV(1 + r)^n, where PV is the present value ($15,000), r is the quarterly interest rate (11.45% annual rate divided by 4, assuming compound interest quarterly), and n is the number of periods (1 quarter). The calculation is as follows: FV = $15,000 * (1 + 0.1145/4)^1 = $15,429.38.
Learning Objectives
- Determine the fiscal value of delayed or advanced payments, taking into account the cost of capital.