Walter borrows 5000 for 20 years at 9% effective for the first 10 years and 11% effective
Question:
Walter borrows 5000 for 20 years at 9% effective for the first 10 years and 11% effective for the last 10 years. He wishes to pay interest yearly and to repay the principal by annual payments into a sinking fund earning interest at rate /.
(a) If his total annual payment is 570 and / = .09, find how much he is short of repaying the loan at the end of 20 years.
(b) If his total annual payment is 570, find / such that the loan is exactly repaid after 20 years.
(c) If / = .10 and his total annual payment is constant, find the amount of that payment in order that the loan be exactly repaid after 20 years.
(d) If / = .10 and the sinking fund deposit is constant, find the amount of that deposit in order that the loan is completely repaid after 20 years.
AppendixLO1
Step by Step Answer:
Theory Of Interest And Life Contingencies With Pension Applications A Problem Solving Approach
ISBN: 978-1566983334
3rd Edition
Authors: Asa Michael M. Parmenter, Ph.d.