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Math Help - Installment loans

  1. #1
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    Apr 2008
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    Installment loans

    I can't figure this problem out at all:

    Ned plans to donate $50 per week to his church for the next 60 years. Assuming an annual interest rate of 5.2% compounded weekly, find the present value of this annuity to Ned's church.

    The formula we are to use is as follows:

    P = Fq [(q^T - 1) / (q - 1)]

    with an installment loan of P dollars paid off in T payments of F dollars at a periodic interest rate of p (written in decimal form), and q = 1/(1+p).

    My prof also let us know the following:

    For all installment loan problems, assume that the payments are made at the end of the period, so that the current value of the first payment is worth P*q.

    For #75 (this problem), assume there are 52 weeks/year.
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  2. #2
    MHF Contributor
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    Ottawa, Canada
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    50[1 - 1/(1 + .052/52)^(60*52)] / (.052/52) = 47788.69693....

    He'll go to heaven for sure
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  3. #3
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    LA,California
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    Re: Installment loans

    Always be cautious about individuals selling stuff door to door, as a number are rip-off artists. Aside from Girl Scouts attempting to get individuals hooked on diabolically addicting cookies, there are a number of door-to-door scams out there. Source for this article:Personal Finance
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