Best Ribs wishes to pay off a debt of \( \$ 40,000 \) in 7 years. What amortization payment would they need to make each six months, at \( 6 \% \) interest compounded semiannually? (Use Table \( 12-2 \) ) Select one: a. \( \$ 3,541.05 \) b. \( \$ 3,910.63 \) c. \( \$ 2,727.79 \) d. \( \$ 2,955.32 \)

To calculate the semiannual amortization payment for a debt of \( \$ 40,000 \) at \( 6\% \) interest compounded semiannually over 7 years (which means 14 periods), we can use the formula for the payment on an amortization schedule: \[ P = \frac{rPV}{1 - (1 + r)^{-n}} \] Where: - \( P \) is the payment, - \( r \) is the interest rate per period (which is \( 6\%/2 = 0.03 \)), - \( PV \) is the present value (the amount owed, \( \$ 40,000 \)), - \( n \) is the total number of payments (which is \( 7 \times 2 = 14 \)). Substituting in, we get: \[ P = \frac{0.03 \times 40000}{1 - (1 + 0.03)^{-14}} \] This gives the semiannual payment amount. After calculation, rounding gives us an approximate payment of \( \$ 3,541.05 \). So the answer is: a. \( \$ 3,541.05 \) Now, let's jump into some engaging knowledge nuggets! Who doesn't love a good debt payoff story? Back in the day, many communities had their own versions of “debt jubilee,” where debts would be forgiven every few years to avoid generational poverty. It’s fascinating to think that the concept of debt management has deep historical roots and continues to be relevant today as people navigate their financial paths! Speaking of navigating, a common mistake is underestimating the importance of tracking your payment schedule or ignoring the power of compounding interest! Always double-check your numbers and keep those payments consistent. Missing just one can really mess up the whole plan, so keep a close eye on your financial ship steering clear of stormy seas!