Question

a. If you borrow $1,700 and agree to repay the loan in six equal annual payments at an interest rate of 11%, what will your payment be? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

**b.** What will your payment be if you make the
first payment on the loan immediately instead of at the end of the
first year? **(Do not round intermediate calculations. Round
your answer to 2 decimal places.)**

Answer #1

This question requires application of PV of annuity - ordinary annuity in part a, and annuity due in part b

PV = $1,700, i = 11%, n = 6

a)

1700 = R * 4.2305

R = $401.84

a) For ordinary annuity (payment made at end of period)

1700 = R * 4.2305

**R = $401.84**

b) For annuity due (payment made at start of period)

1700 = R * 4.2305 * 1.11

**R = $362.02**

If you borrow $1,800 and agree to repay the loan in four equal
annual payments at an interest rate of 10%, what will your payment
be? (Do not round intermediate calculations. Round your
answer to 2 decimal places.)
b. What will your payment be if you make the first
payment on the loan immediately instead of at the end of the first
year? (Do not round intermediate calculations. Round your
answer to 2 decimal places.)

Consider a 4-year amortizing loan. You borrow $2,900 initially
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intermediate calculations. Round your answer to 2 decimal places.)
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cells blank - be certain to enter "0" wherever required.)

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$
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Amount owed(beginnig of yr)
Interest
Principal
Amount owed(end of yr)
1
$100,000
2
3
4
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$
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