A loan of $100,000 is being repaid by 15 equal annual installments made at the end of each year at 6% interest effective annually. Immediately after the 8th payment, the

loan is renegotiated as follows:

i The borrower will make seven annual payments of K to repay the loan, with the first payment three years from the date of renegotiation.

ii The interest rate is changed to 7.5% effective annually.

Calculate K.

Answer options:

(a) 11,068

(b) 11,666

(c) 11,900

(d) 12,193

(e) 12,540