Homework Question Help Needed

label Business & Finance
account_circle Unassigned
schedule 1 Day
account_balance_wallet $5

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 A = $40,000 Principal/ 5% Interest Rate/ 20 yrs. Term of loan. What is the annual payment? (Round to nearest cent)

Jun 25th, 2015

Thank you for the opportunity to help you with your question!

  • Annual Payment = P / [ ( 1 - (1/(1+i)^n) ) / i ]
  • "P" represents the principal amount; "i" represents the interest rate; and "n" represents the length of the loan in years.
40000/{(1-1/(1+0.05)^20)})/0.05

40000/[1-(1/2.65))0.05

40000/(1-0.377)/0.05

40000/(0.623/0.05)

40000/12.46=3210.27

answer is 3210

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Jun 25th, 2015

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Jun 25th, 2015

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