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Erindale Bank offers you a $48,000, five-year term loan at 7.5 percent annual interest. What will...

Erindale Bank offers you a $48,000, five-year term loan at 7.5 percent annual interest. What will your annual loan payment be? (Do not round intermediate calculations. Round the final answer to 2 decimal places.)

   

  Annual loan payment $   
business   accounting   
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Answer #1

Present value of annuity=Annuity[1-(1+interest rate)^-time period]/rate

48000=Annuity[1-(1.075)^-5]/0.075

48000=Annuity*4.045884902

Annuity=48000/4.045884902
which is equal to

=$11863.91(Approx).

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