Question

The three little pigs received a loan for $10000 at an effective annual interest rate of 8% from BBW Bank to make repairs on their brick house. They will repay the loan, starting one year after the loan was disbursed, by making annual payments equal to 7 times the amount of interest due until they can make a final payment of no more than $500. Determine how many payments they will make and the amount of the final payment. (3 decimal place)

(a) The three little pigs will make payments.

(b) The final payment will be for $

Answer 1

a) The three little pigs will make 6 Payments. The total amount of Payment will be 12,564.41

Year	O/s	Interest	Cash	Balance
1	10000	800.00	-	10,800.00
2		864.00	6,048.00	5,616.00
3		449.28	3,144.96	2,920.32
4		233.63	1,635.38	1,518.57
5		121.49	850.40	789.65
6		63.17	442.21	410.62
7		32.85	443.47	-

b) The final payment will be for 443.47.

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