Problem 3.12 A borrower borrows $50,000 for 5 years at an annual loan rate of 7.5%;...

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Problem 3.12 A borrower borrows $50,000 for 5 years at an annual loan rate of 7.5%; he pays $6,000 at the end for each of the first 2 years and then pays K in the remaining 3 years. Find K.

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Answer 1

Answer #1

PV = 50000
Rate = 7.5%

PV = 6000/(1+7.5%) + 6000/(1+7.5%)² + K/(1+7.5%)³ + K/(1+7.5%)⁴ + K/(1+7.5%)⁵
50000 = 10773.99 + K(1/1.075^3 + 1/1.075^4 + 1/1.075^5)
50000 -10773.99 = K*2.25302
K = 17431.57

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Answer 2

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