Question

Allysha just borrowed 42,400 dollars. She plans to repay this loan by making a special payment of 6,500 dollars in 3 years and by making regular annual payments of 7,100 dollars per year until the loan is paid off. If the interest rate on the loan is 7.82 percent per year and she makes her first regular annual payment of 7,100 dollars in one year, then how many regular annual payments of 7,100 dollars must Allysha make? Round your answer to 2 decimal places (for example, 2.89, 14.70, or 6.00).

Answer 1

Amount borrowed	$ 42,400.00
Less:
PV of $6,500	$    5,185.80	=6500/(1+7.82%)^3
Loan repaid through annual payments	$ 37,214.20

Hence, It will take 7.01 years