Monthly interest rate=12/12=1% Present value(PV) of monthly payment=(payment)/((1+i)^N) i=interest rate=1%=0.01 N=month of payment Monthly payments and PV of each monthly payment are given below: N A B=A/(1.01^N) Month Payment PV of payment 0 $2,400 2400 1 $2,300 2277.227723 2 $2,200 2156.651309 3 $2,100 2038.239311 4 $2,000 1921.960689 5 $1,900 1807.784806 6 $1,800 1695.681423 7 $1,700 1585.620693 8 $1,600 1477.573156 9 $1,500 1371.509736 10 $1,400 1267.401737 11 $1,300 1165.220833 TOTAL 21164.87142 Present value=$21,164.87 If the payment is starting with $1300 at time t=0, N A B/(1.01^N) Month Payment PV of payment 0 $1,300 1300 1 $1,400 1386.138614 2 $1,500 1470.444074 3 $1,600 1552.944237 4 $1,700 1633.666586 5 $1,800 1712.638238 6 $1,900 1789.885947 7 $2,000 1865.436109 8 $2,100 1939.314767 9 $2,200 2011.547613 10 $2,300 2082.159996 11 $2,400 2151.176922 TOTAL 20895.3531 Present Value=$20,895.35 N A B=A/(1.01^N) Month Payment PV of payment 0 $2,400 2400 1 $2,300 2277.227723 2 $2,200 2156.651309 3 $2,100 2038.239311 4 $2,000 1921.960689 5 $1,900 1807.784806 6 $1,800 1695.681423 7 $1,700 1585.620693 8 $1,600 1477.573156 9 $1,500 1371.509736 10 $1,400 1267.401737 11 $1,300 1165.220833 TOTAL 21164.87142 Solution Monthly interest rate=12/12=1% Present value(PV) of monthly payment=(payment)/((1+i)^N) i=interest rate=1%=0.01 N=month of payment Monthly payments and PV of each monthly payment are given below: N A B=A/(1.01^N) Month Payment PV of payment 0 $2,400 2400 1 $2,300 2277.227723 2 $2,200 2156.651309 3 $2,100 2038.239311 4 $2,000 1921.960689 5 $1,900 1807.784806 6 $1,800 1695.681423 7 $1,700 1585.620693 8 $1,600 1477.573156 9 $1,500 1371.509736 10 $1,400 1267.401737 11 $1,300 1165.220833 TOTAL 21164.87142 Present value=$21,164.87 If the payment is starting with $1300 at time t=0, N A B/(1.01^N) Month Payment PV of payment 0 $1,300 1300 1 $1,400 1386.138614 2 $1,500 1470.444074 3 $1,600 1552.944237 4 $1,700 1633.666586 5 $1,800 1712.638238 6 $1,900 1789.885947 7 $2,000 1865.436109 8 $2,100 1939.314767 9 $2,200 2011.547613 10 $2,300 2082.159996 11 $2,400 2151.176922 TOTAL 20895.3531 Present Value=$20,895.35 N A B=A/(1.01^N) Month Payment PV of payment 0 $2,400 2400 1 $2,300 2277.227723 2 $2,200 2156.651309 3 $2,100 2038.239311 4 $2,000 1921.960689 5 $1,900 1807.784806 6 $1,800 1695.681423 7 $1,700 1585.620693 8 $1,600 1477.573156 9 $1,500 1371.509736 10 $1,400 1267.401737 11 $1,300 1165.220833 TOTAL 21164.87142.