$1,000 = $1,610.50(PVIFin for 5 years) $1,000/$1,610.50 = 0.6209 = PVIFi5 years

Now, go to Table A.3 and look across the row for year 5 until you find 0.6209. It is in the 10% column, so you would be paying a 10% rate of interest.

Example 2. A bank offers to lend you $100,000 to buy a house. You must sign a mortgage calling for payments of $8,882.73 at the end of each of the next 30 years, equivalent to roughly $740.23 per month. What interest rate is the bank charging you?

1. Recognize that $100,000 is the PV of a 30-year, $8,882.73 annuity:

Was this article helpful?

0 0
Your Retirement Planning Guide

Your Retirement Planning Guide

Don't Blame Us If You End Up Enjoying Your Retired Life Like None Of Your Other Retired Friends. Already Freaked-Out About Your Retirement? Not Having Any Idea As To How You Should Be Planning For It? Started To Doubt If Your Later Years Would Really Be As Golden As They Promised? Fret Not Right Guidance Is Just Around The Corner.

Get My Free Ebook

Post a comment