Determine the equal, annual, end-of-year payment required over the life of the following loans to repay them fully during the stated term.
Loan |
Principal ($) |
Interest Rate (%) |
Term of Loan (Yrs) |
Annual Payment ($) |
|
A |
110,000 |
8 |
17 |
||
B |
20,000 |
14 |
10 |
Loan |
Principal ($) |
Interest Rate (%) |
Term of Loan (Yrs) |
Annual Payment ($) |
A |
10,000 |
8 |
17 |
(Round to the nearest cent.) |
Loan A | Calculation of Annual Payment:- | ||||
Loan Principal Amount | = | $110,000 | |||
Interest rate | = | 8% | p.a. | ||
Term of Loan | = | 17 | years | ||
No. of Annual Payments | = | 17 | |||
Annual Payment Amount | = | Loan Amount | |||
PVAF(8%,17) | |||||
= | $110,000 | ||||
9.12164 | |||||
= | $ 12,059.23 | ||||
Loan B | Calculation of Annual Payment:- | ||||
Loan Principal Amount | = | $20,000 | |||
Interest rate | = | 14% | p.a. | ||
Term of Loan | = | 10 | years | ||
No. of Annual Payments | = | 10 | |||
Annual Payment Amount | = | Loan Amount | |||
PVAF(14%,10) | |||||
= | $20,000 | ||||
5.21612 | |||||
= | $ 3,834.27 | ||||
Loan A | Calculation of Annual Payment:- | ||||
Loan Principal Amount | = | $10,000 | |||
Interest rate | = | 8% | p.a. | ||
Term of Loan | = | 17 | years | ||
No. of Annual Payments | = | 17 | |||
Annual Payment Amount | = | Loan Amount | |||
PVAF(8%,17) | |||||
= | $10,000 | ||||
9.12164 | |||||
= | $ 1,096.29 |
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