Question

Problem 5-10 (Algo) Solving for unknowns; installment notes (LO5-9) Lowlife Company defaulted on a $180,000 loan that was due on December 31, 2021. The bank has agreed to allow Lowlife to repay the $180,000 by making a series of equal annual payments beginning on December 31, 2022. (FV of $1. PV of $1, FVA of $1. PVA of $1. FVAD of $1 and PVAD of S1) (Use appropriate factor(s) from the tables provided.) Required: 1. Calculate the required annual payment if the bank's interest rate is 10% and four payments are to be made. 2. Calculate the required annual payment if the bank's interest rate is 8% and five payments are to be made. 3. If the bank's interest rate is 10%, how many annual payments of $27,713 would be required to repay the debt? 4. If three payments of $66,097 are to be made, what interest rate is the bank charging Lowlife? Complete this question by entering your answers in the tabs below.Problem Required 1 Required 2 Required 3 Required 4 Calculate the required annual payment if the bank's interest rate is 10% and four payments are to be made. (Round your final answers to nearest whole dollar amount.) Table or calculator function: Present Value: no Annual Installment

Answer 1

& Low life company defauted on a s180,00 0 Loon Requised I Table or calculator funcion present value 180,000 10% $ 56,785 Annual Installment - I = 10%, N = 4 ( check the table 10% column, PV = is 180,000 PV of an ordinary annuity toble a period Row] factor 3-16987 Annual Installment = $ 180000 + 3.16987 | $ 56,785 Required: Table or calculator funcion present value 180,000 na 5 i= 80% Annual installment & 45082 - I=8%, N=52 - pr of an ordinary Annuity table factor 3.99271 of column spelog

Annual Instalment = $ 180,000 -3.9921] lis 45082 Requiaea : 31 $ 180,000 present value: n- 10% $27, 713 Annual Installments & Here we need to find Inie number of years 1) first find the factor $ 180,000 - 27713 - 6.4951 cusing 2 now locate this factor in 20% column Proa table) we locate the same in til period Row Hence IL payments would be required to repay the debt. Required :4. present value $ 180,000 n 5 . Annuity Payment 66097 Here we need to find IT

> flast we need to find the factor > $ 180,000 $ 66094 = 2.+2331 factor in PVOA table 3 period > Now locate this row. 3 we locate this = 5% Column Hence I = 15 l