Question

4. You are about to borrow $16,000 from a bank at an interest rate of 7% compounded annually. You are required to make five equal repayments in the amount of $3,500 per year, with the first repayment occurring at the end of year 1. a. Show the interest payment and principal payment in each year. b. How much is still owing at the end of year 5? c. What annual payments would be required to completely pay off the loan in Year 5?

Answer 1

sweet 3500 Solution :- P = $ 16,000 ROI = 7% Compounded anually. no. of Repayments = $ Amount of Repays = $3500/fr. Year. I Amount 1 Interest | Paid - $3745 I $245 - 3500 3 - $4007.15 $507.15- 3500 $ 4287.65 $ 787.65 4 + $ 4587-7864 $ 1087.7867 3500 5 t $4908.937 $1408.937 3500 TP-3500 7 Amount (A) = P(HR) I = A-P] everytime) for n=1 A= $( 17 7 2 A= $3745 (3500) for second year (using 1st year amount as A) u. A 3745 (1+ 7) = $400715 for third Year - A - 4007015 ( 1+ 2)2 = $4287-65 for ut You 4287.65(14 3 je u584.486 for sth Your A-4583-486( 11 m ): $4908-93

(6) Amount paid at the end of 5 years = 3500x5 = $ 17500 Amount to be paid = 3745+ 4007.157 4287.657 4587.786 + 4908.93 = $ 21536.516 . Remaining amount to be paid - $21536516 - $ 40 36.516 (C) paid in ③ years for the amount to be we freed to pay 21536.516 - $4307.30 Spear
thank you