Thread: 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.

50[1 - 1/(1 + .052/52)^(60*52)] / (.052/52) = 47788.69693....

He'll go to heaven for sure