A borrower had a loan of 60,000 at 4% compounded annually with 9annual payments. Suppose...

A borrower had a loan of 60,000 at 4% compounded annually with 9 annual payments. Suppose the borrower paid off the loan after 5 years. Calculate the amount needed to pay off the loan.

Expert Solution

Calculating Annual Payment,

Using TVM Calculation,

PMT = [PV = 60,000, FV = 0, N = 9, I = 0.04]

PMT = $8,069.58

Calculating Loan Balance after 5 years,

Using TVM Calculation,

FV = [PV = 60,000, PMT = -8,069.58, N = 5, I = 0.04]

FV = $29,291.73

Amount to be paid at the end of Year 5 = $29,291.73

jeff jeffy answered 2 years ago

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