The strug company purchased office furniture and equipment for $8,600 and agreed to pay for the purchase by making five annual installment payments beginning immediately. the installment payments include interest at 8%. what is the required annual installment payment? (fv of $1, pv of $1, fva of $1, pva of $1, fvad of $1 and pvad of $1) (use appropriate factor(s) from the tables provided.)
a. $1,720
b. $2,154
c. $1,994
d. $1,466

Annual payments = $2154

so correct option is b. $2,154

Explanation:

given data

present value = $8600

installment n = 5

rate = 8%

to find out

What is the required annual installment payment

solution

we know that present value is

Present value = Annual payments × Present value of annuity factor at 8% and 5 installment      .........................1

so Present value of annuity factor is

Present value of annuity factor =

here r is rate and n is installment

so put here value

Present value of annuity factor =

Present value of annuity factor =  3.9927

so from equation 1

$8600=Annual payments × 3.9927

Annual payments = $2154

so correct option is b. $2,154

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4. education

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