Respuesta :
The present value of this 4-year loan is $12,514.20
What is the present value formula of a single cash flow?
The present value of a single cash flow, which is today's equivalent of cash flow when discounted using the appropriate monthly discount rate of 1%(12%/12)
PV=FV/(1+r)^N
FV=monthly future cash flow
r=monthly discount rate=1%
N=the particular month in which the cash flow is expected, it is 1 for month 1, 2 for month 2 and so on
PV= $200/(1+1%)^1+$200/(1+1%)^2+$200/(1+1%)^3+$200/(1+1%)^4+$200/(1+1%)^5+$200/(1+1%)^6+$200/(1+1%)^7+$200/(1+1%)^8+$200/(1+1%)^9+$200/(1+1%)^10+$200/(1+1%)^11+$200/(1+1%)^12+$200/(1+1%)^13+$200/(1+1%)^14+$200/(1+1%)^15+$200/(1+1%)^16+$200/(1+1%)^17+$200/(1+1%)^18+$200/(1+1%)^19+$200/(1+1%)^20+$200/(1+1%)^21+$200/(1+1%)^22+$200/(1+1%)^23+$200/(1+1%)^24+$400/(1+1%)^25+$400/(1+1%)^26+$400/(1+1%)^27+$400/(1+1%)^28+$400/(1+1%)^29+$400/(1+1%)^30+$400/(1+1%)^31+$400/(1+1%)^32+$400/(1+1%)^33+$400/(1+1%)^34+$400/(1+1%)^35+$400/(1+1%)^36+$600/(1+1%)^37+$600/(1+1%)^38+$600/(1+1%)^39+$600/(1+1%)^40+$600/(1+1%)^41+$600/(1+1%)^42+$600/(1+1%)^43+$600/(1+1%)^44+$600/(1+1%)^45+$600/(1+1%)^46+$600/(1+1%)^47+$600/(1+1%)^48
PV=$12,514.20
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