Tom borrows $100 at annual effective interest rate of 4% and agrees to repay it with...

Tom borrows $100 at annual effective interest rate of 4% and agrees to repay it with 30 annual installments. The amount of each payment in the last 20years is set at twice that in the first 10 years. At the end of 10 years, Tom has the option to repay the entire loan with a final payment $X, in addition to the regular payment. This will yield the lender an annual effective rate of 4.5% over the 10-year period. Calculate $X? (ANS: 108.88)

Expert Solution

Colby Messinger answered 1 year ago

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