Question

(1 point) (Exercise 5.27) A borrower is repaying a loan with payments of $1590 at the end of every year over an unknown period of time. If the amount of interest in the 5th instaliment is $1060, find the amount of principal in the 7th installment. Assume that interest is 11 % convertible quarterly. ANSWER -S

Answer 1

Sol Gluen data: - Interest Rate = wf. Convertible Effective annual Rate .ro quarterly. 4/41 z 1.1146-1 20.1146 Yoo Effective Annual fate . E 11.461) Interest paid for in oth installment = $1060 sy outstanding balance at begening of year 5 - $1060/146/ L - $9249.563. > Annual payment - $ 1590 =y. So, principle paid in year 1590 - $1060 > Hence, so, outstanding = $9249$530 balance at end of year 5 - 8519.)

Interest paid in year 6 = $8719x 11.461 > principal payment in year 6= $1590 - $999. these - outstanding balance in year"}}=$ 8719-8591-48128 love interest paád Pn year "t" $2128x11.461. 2$931-sen principal payment In Year"=" # 1590 - 931. principal payment in year't = $659] outstanding balance in year t =$8128 – $ 659 $9469:

And we got that, - out standing balance in the 9th installment - $7469. Amount of principal paid in the 9th installment - $ 659.)