Question

DataRevicwiew Times New Roman 12 A" AT Av 1:11 ////EEi@werg. & Center w $. % , y Pay interest at the rate of 8%per year for 4 years and then a final payment of interest and principal at the end of the 5th year; 3 Amount 4 Period (years) s Interes rate S 300,000 8% Answer 8 Annual Interest Payment- 9 Year 5 Payment r 0 Toal Payment 12 13 14 15 16 l

Investor #2 offers you the $300,000 paying interest at the rate of 8% per year for 4 years and then a final payment of interest and principal at the end of the 5th year . find annual interest payment , year 5 payment , total payment and interest paid

Answer 1

Principal Amount = $300,000

Interest Rate = 8%

Annual Interest Payment = $300,000*8% = $24,000

Year 5 Payment = Interest of 1 year + Principal Amount = $24,000 + $300,000 = $324,000

Total Payment = $24,000*4 + $324,000 = $420,000

Interest Paid = Total Payment - Principal Amount = $420,000 - $300,000 = $120,000