Question
An individual can repay a loan of $250,000 over 30 years in one of two ways: 30 annual level payments based on amortization at
An individual can repay a loan of $250,000 over 30 years in one of two ways:
• 30 annual level payments based on amortization at i = 0.12;
• A 30-payment annuity-immediate using the sinking fund method.
The loan rate i is 0.10 and sinking fund earns rate j. Find the value of j to make the schemes equivalent. If you have used any Excel function(s), in your solutions, write down the function and function arguments used to obtain the answer.
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College Algebra Graphs and Models
Authors: Marvin L. Bittinger, Judith A. Beecher, David J. Ellenbogen, Judith A. Penna
5th edition
321845404, 978-0321791009, 321791002, 978-0321783950, 321783956, 978-0321845405
