You take out a loan for $12257 today. The bank requires that you repay the loan...

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Question

You take out a loan for $12257 today. The bank requires that you repay the loan with two equal payments, one payment in year 1 and one payment in 2. The interest on the loan is 7% per year. How big is each loan payment?

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Answer 1

Answer #1

The loan is to be repaid in two equal payments

Payment amount = 12,257/PVAF(7%, 2 years)

= $6,779.25 (approx.)

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Answer 2

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