Assume a lender offers you a $45,000, 10%, 6- YEARS loan that is to be fully...

Assume a lender offers you a $45,000, 10%, 6- YEARS loan that is to be fully amortized with 6 annual payments. The first payment will be due one year from the loan date. How much will you have to pay each year?

Solutions

Expert Solution

Annual Payment= [P x R x (1+R)^N]/[(1+R)^N-1]

Where,

P= Loan Amount

R= Interest rate per period

N= Number of periods

= [ $45000x0.1 x (1+0.1)^6]/[(1+0.1)^6 -1]

= [ $4500( 1.1 )^6] / [(1.1 )^6 -1

=$10332.33

jeff jeffy answered 1 year ago

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