Answer:
B. $8,499.13
Explanation:
The amount that Todd will be able to borrow is the equivalent of a monthly payment of £160 for five years at 4.9%.
The applicable formula is the annuity formula as below
Present Value of Annuity: PV = P × 1 − (1+r)−^n
r
Since the payments are monthly
pv= value of loan
P= 160,
r= 4.9% divided by 12
n= 12 months multiplied by five years
Pv = 160 x 1 - (1+0.0041)^-60
0.0041
pv = 160 x 1 - 0.78232
0.0041
Pv = 160 x (0.2178/0.0041)
Pv= 160 x 53.12
pv =£8,499.2
