Question

Loan payment Determine the equal, end-of-year payment required each year over the life of the loans...

Loan payment Determine the equal, end-of-year payment required each year over the life of the loans shown in the following table to repay them fully during the stated term of the loan.
Loan    Principal    Interest rate    Term of loan (years)
A    $12,000       8%       3
B       60,000    12     10
C       75,000    10     30
D         4,000    15        5

Homework Answers

Answer #1

Equal year end payment can be calculated using PV formula of annuity,

PMT = PV*r/(1 - (1+r)^-t)

where PMT is yearly payment

PV = principal

r = interest rate

t = term of loans in years

So, For Loan A, yearly payment PMT = 12000*0.08/(1 - 1.08^-3) = $4656.40

For Loan B. yearly payment PMT = 60000*0.12/(1 - 1.12^-10) = $10619.05

For Loan C, yearly payment PMT = 75000*0.1/(1 - 1.1^-30) = $7955.94

For Loan D, yearly payment PMT = 4000*0.15/(1 - 1.15^-5) = $1193.26

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
9. Calculating an installment loan payment using the add-on method Calculating the loan payment on an...
9. Calculating an installment loan payment using the add-on method Calculating the loan payment on an add-on interest installment loan Installment loans allow borrowers to repay the loan with periodic payments over time. They are more common than single–payment loans because it is easier for most people to pay a fixed amount periodically (usually monthly) than budget for paying one big amount in the future. Interest on installment loans may be computed using the simple interest method or the add-on...
You borrow ​$300,000 to buy a house over a 15​-year term. The loan is structured as...
You borrow ​$300,000 to buy a house over a 15​-year term. The loan is structured as an amortized loan with annual payments and an interest rate of 10​%. Find the information for the amortization schedule for years 1 and 2. Payment​ ($) Interest in Payment​ ($) Principal Repaid​ ($) Principal Owing at End of Year​ ($)
An amortization table reports the amount of interest and principal contained within each regularly scheduled payment...
An amortization table reports the amount of interest and principal contained within each regularly scheduled payment used to repay an amortized loan. Example Amortization Schedule Year Beginning Amount Payment Interest Repayment of Principal Ending Balance 1 2 3 Consider the amount of the interest payments included in each of the payments of an amortized loan. Which of the following statements regarding the pattern of the interest payments is true? The portion of the payment going toward interest is smaller in...
1. ______________ is a necessary characteristic for amortized loans over its life. Either equal or unequal...
1. ______________ is a necessary characteristic for amortized loans over its life. Either equal or unequal principal payments One lump-sum principal payment Increasing payments Equal interest payments Declining periodic payments 2. Amy and Anna are of the same age. Amy invests $4,000 at 6 percent at age 25. Anna invests the same amount at the same interest rate at age 30. Both investments compound interest annually. Both of them retire at age 60 and neither adds nor withdraws funds prior...
Seth repays a 30-year loan with a payment at the end of each year. Each of...
Seth repays a 30-year loan with a payment at the end of each year. Each of the first 20 payments is 1200, and each of the last 10 payments is 900. Interest on the loan is at an annual effective rate of i, i>0. The interest portion of the 11th payment is twice the interest portion of the 21st payment. Calculate the interest portion of the 21st payment. (A)250 (B)275 (C)300 (D)325 (E)There is not enough information to calculate the...
A 20-year loan is to be repaid with level payments at the end of each year....
A 20-year loan is to be repaid with level payments at the end of each year. The amount of interest paid in the 5th payment is 103.17. The amount of interest paid in the 13th payment is 57. Find the amount of interest and principal paid in the 17th payment. (Answers: 30, 270.)
Your company is planning to borrow $1 million on a 5-year, 15%, annual payment, fully amortized...
Your company is planning to borrow $1 million on a 5-year, 15%, annual payment, fully amortized term loan. Develop an amortization schedule by inserting an additional column that will represent the fraction of the payment made at the end of each year that will represent repayment of principal.
Your company is planning to borrow $1 million on a 3-year, 12%, annual payment, fully amortized...
Your company is planning to borrow $1 million on a 3-year, 12%, annual payment, fully amortized term loan. What fraction of the payment made at the end of the second year will represent repayment of principal? Round your answer to two decimal places. ________ %
Problem 4-30 Loan Amortization Your company is planning to borrow $3 million on a 7-year, 11%,...
Problem 4-30 Loan Amortization Your company is planning to borrow $3 million on a 7-year, 11%, annual payment, fully amortized term loan. What fraction of the payment made at the end of the second year will represent repayment of principal? Round your answer to two decimal places. %
Amortization Schedule Consider a $50,000 loan to be repaid in equal installments at the end of...
Amortization Schedule Consider a $50,000 loan to be repaid in equal installments at the end of each of the next 5 years. The interest rate is 9%. Set up an amortization schedule for the loan. Round your answers to the nearest cent. Enter "0" if required Year Payment Repayment Interest Repayment of Principal Balance 1 $   $   $   $   2 $   $   $   $   3 $   $   $   $   4 $   $   $   $   5 $   $   $   $   Total...