Question

Dr. Kizildag has an investment of $1 million. The Murat Bank is willing to finance this at 8% interest rate. The loan would be repaid with 19 equal annual end-of year payments. The annual payments would be equal to:

Group of answer choices

$104,128

None of these

$108,124

$101,248

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From the perspective of France, the direct quote indicates.....

Answer 1

Answer is $104,128

Investment = $1,000,000
Number of Payments = 19
Interest Rate = 8%

Let annual payment be $x

$1,000,000 = $x/1.08 + $x/1.08^2 + … + $x/1.08^18 + $x/1.08^19
$1,000,000 = $x * (1 - (1/1.08)^19) / 0.08
$1,000,000 = $x * 9.6035992
$x = $104,128

Annual Payment = $104,128