Question

A company borrowed $150,000 at an interest rate of 9% compounded annually over six years. the loan will be repaid in installments at the end of each year, according to the accompanying repayment schedule. what will be the size of the last payment (x) that will pay off the loan?

Answer 1

Answer:

French Loan Schedule   $33,437.97

German Loan Schedule $27,250

Explanation:

As there is no information attached about the kind of loan schedule I'm ghoing to resumethe work for the two possible options:

French Loan (equal payment across year)

This will be an annuity of 6 year at 9% interest:

$PV \div \frac{1-(1+r)^{-time} }{rate} = C$

PV 150,000.00

time 6

rate 0.09

$150000 \div \frac{1-(1+0.09)^{-6} }{0.09} = C$

C  $ 33,437.967

German Loan (equal amortization across the loan-life)

$150,000 / 6 = 25,000 amorization per year

Last year payment will be the 25,000 plus the interest accrued during this time:

25,000 x ( 1+ 0.09) = $27,250

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If the question what about different principal payment across times then, there do another question an attach that information.