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A loan of $60,000 is due 10 years from today. The borrower wants to make annual...

A loan of $60,000 is due 10 years from today. The borrower wants to make annual payments at the end of each year into a sinking fund that will earn 10 percent interest, compounded monthly. What would the annual payments have to be?

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Answer #1

ANSWER = $3,514.85

where,

FV of annuity = Future value = 60,000

r = Rate = 0.10/12 = 0.00833333 [compounded monthly]

t = Time = 10yrs x 12 = 120 [compounded monthly]

P = Periodic payment

Annual payment = 292.904488 x 12 = 3,514.85386

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