Question

A loan has an initial balance of $100,000 and has interest charged at 8% compounded annually. You are going to pay the loan back with even payments in years 1, 2, 3, 4, (no payment year 5), 6, 7, 8 and 9. Find the payment amount.

Answer 1

set the equation as below

balance=100000

A*(1/(1+8%)^1+1/(1+8%)^2+1/(1+8%)^3+1/(1+8%)^4+1/(1+8%)^6+1/(1+8%)^7+1/(1+8%)^8+1/(1+8%)^9)=100000

A=100000/(1/(1+8%)^1+1/(1+8%)^2+1/(1+8%)^3+1/(1+8%)^4+1/(1+8%)^6+1/(1+8%)^7+1/(1+8%)^8+1/(1+8%)^9)

=17965.24 (ANSWER)