the amount is 1125.5, but not
entirely sure how to get there. No excel please
Annual Payments = $ 2000, Interest Rate = 15% and Loan = $ 10000
Let the required final payment be $ P
Further, the number of payments is at least 5 as 5 x 2000 = $ 10000 in case the discount rate is zero.
Therefore, 2000 x (1/0.15) x [1-{1/(1.15)^(5)}] = $ 6704.31
Remaining Payment = $ 10000 - 6704.31 = $ 3295.69
PV of Another $ 2000 coming in at the end of Year 6 = 2000 / (1.15)^(6) = $ 864.655
Remaining Payment = 3295.69 - 864.655 = $ 2431.03
PV of Another $ 2000 coming in at the end of Year 7 = 2000 / (1.15)^(7) = $ 751.874
Remaining Payment = 2431.03 - 751.874 = $ 1679.16
PV of Another Payment coming in at the end of Year 8 = 2000 / (1.15)^(8) = $ 653.804
Remaining Payment = 1679.16 - 653.804 = $ 1025.36
PV of Another Payment coming in at the end of Year 9 = 2000 / (1.15)^(9) = $ 568.525
Remaining Payment = 1025.36 - 568.525 = $ 456.832
PV of Another $ 2000 at the end of Year 10 is higher than the outstanding payment, thereby implying that the final payment P is made at the end of Year 10
Therefore, P = 456.832 x (1.15)^(10) = $ 1848.14
Loan Outstanding at the end of Year 4 = 2000 x (1/0.15) x [1-{1/(1.15)^(5)}] + 1848.14 / (1.15)^(6) = $ 7503.31
Interest Accrued on Outstanding Loan during year 5 = 7503.31 x 0.15 = $ 1125.5
Interest Portion of 5th Payment = Interest Accrued on Outstanding Loan during Year 5 = $ 1125.5
Hence, the correct option is (E)
the amount is 1125.5, but not entirely sure how to get there. No excel please A...
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all
of three please
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can somebody help me with 37,38 and (most needed) 40
please???
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Explain without excel
(3) An amortized loan is repaid with annual payments which start at $400 at the end of the first year and increase by $45 each year until a payment of $1,480 is made, after which they cease. If interest is 4% effective, find the amount of principal in the fourteenth payment.
Please post with mathematical
formulas please, not an excel sheet!
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