Question

How much will Kingston Technologies have to pay each year in eight equal payments, starting 2 years from now, to repay $850,000 loan? The interest rate is 12% per year.

Answer 1

How much will Kingston Technologies have to pay each year in eight equal payments, starting 2 years from now, to repay $850,000 loan? The interest rate is 12% per year.

Take that 850000 to the end of 2nd year using (F/P, i, n) factor

FV = 850,000(F/P, 12%, 2)

FV = 850,000(1.254) = 1,065,900

Calculate the annual uniform amout for 8 years to recover 1,065,900

A = 1,065,900(A/P, 12%, 8)

A = 1,065,900(.2013) = 214,565.67

Hence the yearly deposits will be 214,565.67 for eight years to recover a loan of 850000.