Answer :
We start with the details of Kendra’s loan:
1. The loan amount is \[tex]$750. In the TVM (Time Value of Money) setup, the Present Value (PV) is entered as \$[/tex]-750 (the negative sign indicates a cash outflow).
2. The Annual Percentage Rate (APR) is given as 8.4%. Since the interest is compounded monthly, we must first determine the monthly interest rate. There are 12 months in a year, so the interest rate per month is
[tex]$$
\text{Monthly Interest Rate} = \frac{8.4\%}{12} = 0.7\%.
$$[/tex]
3. Kendra will make monthly payments of \[tex]$46.50. In the TVM Solver, the Payment (PMT) is entered as \$[/tex]46.50.
4. Since the loan is paid off completely, the Future Value (FV) is \[tex]$0.
5. The payments occur monthly. Therefore, the number of payments per year (P/Y) is 12. Also, because the interest compounds monthly, the number of compounding periods per year (C/Y) is also 12.
Now, when setting up the TVM Solver, the key values are:
- $[/tex]I\% = 0.7\%[tex]$ (monthly interest rate)
- $[/tex]PV = -750[tex]$
- $[/tex]PMT = 46.5[tex]$
- $[/tex]FV = 0[tex]$
- $[/tex]P/Y = 12[tex]$
- $[/tex]C/Y = 12[tex]$
Looking at the answer choices, the option that uses $[/tex]I\% = 0.7[tex]$, $[/tex]P/Y = 12[tex]$, and $[/tex]C/Y = 12$ with the other values correctly entered is:
Option B.
Thus, the correct answer is Option B.
1. The loan amount is \[tex]$750. In the TVM (Time Value of Money) setup, the Present Value (PV) is entered as \$[/tex]-750 (the negative sign indicates a cash outflow).
2. The Annual Percentage Rate (APR) is given as 8.4%. Since the interest is compounded monthly, we must first determine the monthly interest rate. There are 12 months in a year, so the interest rate per month is
[tex]$$
\text{Monthly Interest Rate} = \frac{8.4\%}{12} = 0.7\%.
$$[/tex]
3. Kendra will make monthly payments of \[tex]$46.50. In the TVM Solver, the Payment (PMT) is entered as \$[/tex]46.50.
4. Since the loan is paid off completely, the Future Value (FV) is \[tex]$0.
5. The payments occur monthly. Therefore, the number of payments per year (P/Y) is 12. Also, because the interest compounds monthly, the number of compounding periods per year (C/Y) is also 12.
Now, when setting up the TVM Solver, the key values are:
- $[/tex]I\% = 0.7\%[tex]$ (monthly interest rate)
- $[/tex]PV = -750[tex]$
- $[/tex]PMT = 46.5[tex]$
- $[/tex]FV = 0[tex]$
- $[/tex]P/Y = 12[tex]$
- $[/tex]C/Y = 12[tex]$
Looking at the answer choices, the option that uses $[/tex]I\% = 0.7[tex]$, $[/tex]P/Y = 12[tex]$, and $[/tex]C/Y = 12$ with the other values correctly entered is:
Option B.
Thus, the correct answer is Option B.