1. A $12,000 loan is being repaid with $1000 payments at the end of each year...

Question

Question

Answer 1

Answer #1

FV of the installments immediately after the 9th payment = 1000*(1.06^9-1)/0.06 =	$ 11,491.32
FV of the loan amount (assuming that the loan is treated
separately) = 12000*1.06^9 =	$ 20,273.75
Amount outstanding in the loan account immediately after the 9th annual payment = 20273.75-11491.32 =	$ 8,782.43

Answer 2

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