A demand loan of $6000 is repaid by payments of $3000 after two years, $3000 after...

A demand loan of $6000 is repaid by payments of $3000 after two years, $3000 after
four years, and a final payment after seven years. Interest is 8% compounded quarterly
for the first two years, 9% compounded semi-annually for the next two years, and 9%
compounded quarterly thereafter. What is the size of the final payment?

Expert Solution

The process for solving the question is first we need to calculate future value at the payment date and deduct payment from amount and then taking this value as present value again future value is calculated at next payment date

amount = present value *(1+rate/n)^n*years

A) fv after 2 years

= 6000*(1+0.08/4)^4*2 = 7029.95

payment is 3000

new present value at the end of 2 years is 4029.95

B) amount at end of 4 years is

= 4029.95*(1+0.09/2)^2*2 = 4805.79

less payment = 3000

present value left at the end of 4 years is 1805.79

C) final payment will be future value of 1805.79

final pay = 1805.79*(1+0.09/4)^4*3 =2358.45

so final payment is 2358.45

jeff jeffy answered 2 years ago

A $10,000 loan is to be repaid in monthly equal payments in 10 years with an...

A $10,000 loan is to be repaid in monthly equal payments in 10 years with an annual effective interest rate of 19.56% charged against the unpaid balance. What principal remains to be paid after the third payment?

A loan will be repaid in 5 years with monthly payments at a nominal interest rate...

A loan will be repaid in 5 years with monthly payments at a nominal interest rate of 9% monthly convertible. The first payment is $1000 and is to be paid one month from the date of the loan. Each succeeding monthly payment will be 2% lower than the prior payment. Calculate the outstanding loan balance immediately after the 40th payment is made.

If a loan was repaid by semi-annual payments of $4710.00 in 6.5 years at 8.34% compounded...

If a loan was repaid by semi-annual payments of $4710.00 in 6.5 years at 8.34% compounded quarterly, how much interest was paid?

Reggie takes a loan for 5 years to be repaid by level end of year payments...

Reggie takes a loan for 5 years to be repaid by level end of year payments of R. The interest paid in the third payment was 136.16 and the interest paid in the 5th payment was 47.62. Please find the amount of principal paid in the fourth payment P4. don't copy and paste

Mary takes a loan for 5 years to be repaid by level end of year payments...

Mary takes a loan for 5 years to be repaid by level end of year payments of R. The interest paid in the third payment was 136.16 and the interest paid in the 5 th payment was 47.62. Please find the amount of principal paid in the fourth payment P4.

A company borrowed $500,000 and repaid the loan through yearly payments of $20,000 for 24 years...

A company borrowed $500,000 and repaid the loan through yearly payments of $20,000 for 24 years plus a single lump-sum payment of $1,000,000 million at the end of 24 years. The interest rate on the loan was closest to: 6% per year 4% per year 0.5% per year 8% per year The following five alternatives that are evaluated by the rate of return method, If the alternatives are mutually exclusive and the MARR is 15% per year, the alternative to...

1. A demand loan for $9565.91 with interest at 9.6% compounded monthly is repaid after 7...

1. A demand loan for $9565.91 with interest at 9.6% compounded monthly is repaid after 7 years, 2 months. What is the amount of interest paid? 2. An investment of $3910.75 earns interest at 6.9% per annum compounded annually for 2 years. At that time the interest rate is changed to 9% compounded monthly. How much will the accumulated value be 1.5 years after the change?

A loan of amount $17820 is to be repaid in payments that each consist of a...

A loan of amount $17820 is to be repaid in payments that each consist of a principal repayment of $540 plus the interest on the previous outstanding balance. What is the total interest paid if the interest per payment period is 2.1%?

A loan is to be repaid in end of quarter payments of $1,000 each, with there...

A loan is to be repaid in end of quarter payments of $1,000 each, with there being 20 end of quarter payments total. The interest rate for the first two years is 6% convertible quarterly, and the interest rate for the last three years is 8% convertible quarterly. Find the outstanding loan balance right after the 6th payment.

A loan of 10000$ is to be repaid with annual payments, at the end of each...

A loan of 10000$ is to be repaid with annual payments, at the end of each year, for the next 20 years. For the rst 5 years the payments are k per year ; the second 5 years, 2k per year ; the third 5 years, 3k per year ; and the fourth 5 years, 4k per year. (a) Draw two timelines describing this series of payments. (b) For each of the timelines in (a), find an expression for k...

Question