Question
Assume you borrow $25,000 student loan from Keystone Bank with 7 years to maturity. To pay back to the loan, you decide to payback
Assume you borrow $25,000 student loan from Keystone Bank with 7 years to maturity. To pay back to the loan, you decide to payback Keystone Bank $2500 after 1 year (i.e., at the end of year 1), payback $5000 after 2 year, and payback $7500 after 3 year. After that, you plan to pay back an amount, SW, each year at the end of years 4-7. Assume that the interest rate is 8 percent. How much is the annual payment amount $W that will allow you to pay back student loan throughout the 7-year period?
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To determine the annual payment amount that will allow you to pay back the student loan throughout the 7year period we can use the concept of present value Given Loan amount 25000 Maturity period 7 ye...Get Instant Access to Expert-Tailored Solutions
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Income Tax Fundamentals 2013
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