Question

Determine the​ equal, annual,​ end-of-year payment required over the life of the following loans to repay them fully during the stated term.  

Loan	Principal​ ($)	Interest Rate​ (%)	Term of Loan​ (Yrs)	Annual Payment​ ($)
A	110,000	8	17
B	20,000	14	10

Loan	Principal​ ($)	Interest Rate​ (%)	Term of Loan​ (Yrs)	Annual Payment​ ($)
A	10,000	8	17	​(Round to the nearest​ cent.)

Answer 1

Loan A	Calculation of Annual Payment:-
		Loan Principal Amount	=	$110,000
		Interest rate	=	8%	p.a.
		Term of Loan	=	17	years
		No. of Annual Payment​s	=	17
		Annual Payment​ Amount	=	Loan Amount
				PVAF(8%,17)
			=	$110,000
				9.12164
			=	$       12,059.23
Loan B	Calculation of Annual Payment:-
		Loan Principal Amount	=	$20,000
		Interest rate	=	14%	p.a.
		Term of Loan	=	10	years
		No. of Annual Payment​s	=	10
		Annual Payment​ Amount	=	Loan Amount
				PVAF(14%,10)
			=	$20,000
				5.21612
			=	$         3,834.27
Loan A	Calculation of Annual Payment:-
		Loan Principal Amount	=	$10,000
		Interest rate	=	8%	p.a.
		Term of Loan	=	17	years
		No. of Annual Payment​s	=	17
		Annual Payment​ Amount	=	Loan Amount
				PVAF(8%,17)
			=	$10,000
				9.12164
			=	$         1,096.29

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