I have borrowed $14,500 from a bank. It is a 5-year interest only loan, with annual...

I have borrowed $14,500 from a bank. It is a 5-year interest only loan, with annual payments. The APR is 8%. What will be my payments each year?

Expert Solution

The annual payment can be calculated with the following equation:

Borrowed amount = Annual payment * ((1 - (1 + R)^-N)/R

where Borrowed amount = 14500

R = 8%

N = 5

14500 = Annual payment * ((1 - (1 + 8%)^-5)/8%

14500 = Annual payment * 3.992710

Annual payment = 14500/3.992710

= $3631.62

jeff jeffy answered 2 years ago

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