Answer:
$130,537.34
Explanation:
We apply the formular for calculating present value of annuity to find quarterly payment in this case. Specifically in this calculation, the financing amount is the Present Value (PV), the number of time equal repayment quarterly will be made is n which forms an annuity, the discounted rate is the charged interest rate by loan issuer (r).
What we need to find is how much will equal quarterly equal repayment will be (C).
The formular for finding present value of annuity as shown below:
PV = C x ( [ 1- (1+i)^(-n) ] / i )
where:
PV = the financing amount = $ 4 million x ( 100% - 12%) = $3.52 million
i = 12% /4 = 3%
n = 4 x 14 = 56 ( as the interest rate is compounded quarterly)
by applying PV, i, n, we have C = $130,537.34
