Question

A loan of $10,000 is to be repaid by annual payments of $1,000 with the first payment occurring 1 year from now, and continuing as long as necessary. The last payment is less than the regular payment and is paid exactly one year after the final regular payment. If the interest rate is 3% effective, when is the partial payment made and what is the amount of the partial payment?

Answer #1

Year | PVF @ 3% | Present value | ||

1 | 1000 | 0.970874 | 970.8738 | |

2 | 1000 | 0.942596 | 942.5959 | |

3 | 1000 | 0.915142 | 915.1417 | |

4 | 1000 | 0.888487 | 888.487 | |

5 | 1000 | 0.862609 | 862.6088 | |

6 | 1000 | 0.837484 | 837.4843 | |

7 | 1000 | 0.813092 | 813.0915 | |

8 | 1000 | 0.789409 | 789.4092 | |

9 | 1000 | 0.766417 | 766.4167 | |

10 | 1000 | 0.744094 | 744.0939 | |

11 | 1000 | 0.722421 | 722.4213 | |

12 | 1000 | 0.70138 | 701.3799 | |

Total Regular paymentmade | 9954 | |||

Loan amount | 10000 | |||

Less: Regular payment | -9954 | |||

balannce left | 46 | |||

Add: Interest @ 3% | 1.38 | |||

Amount of partial payment to be made at end of 13th yr | 47.38 | |||

A loan of 10,000 is being repaid with payments of 500 starting
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Answer = $ (3 decimal place)

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Thanks

A loan is amortized by level annual payments every July 22, plus
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