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You receive a 4-year $13,000 negative amortization loan with an interest rate of 10% p.a., to...

You receive a 4-year $13,000 negative amortization loan with an interest rate of 10% p.a., to be repaid in four annual installments. The loan requires that you make total payments of $400 at t = 1, $100 at t = 2, and $300 at t = 3, with the remaining loan balance paid at maturity. What is the total payment amount at t = 4, rounded to the nearest dollar?

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Answer #1

Calculating Amount to be paid in Year 4,

13,000 = 400/(1.10) + 100/(1.10)2 + 300/(1.10)3 + C4/(1.10)4

C4 = $18,049.90

Amount paid in Year 4 = $18,049.90

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