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Chuck Ponzi has talked an elderly woman into loaning him $20,000 for a new business venture. She has, however, successfully passed a finance class and

Chuck Ponzi has talked an elderly woman into loaning him $20,000 for a new business venture. She has, however, successfully passed a finance class and requires Chuck to sign a binding contract on repayment of the $20,000 with an annual interest rate of 11% over the next 5 years. Ponzi may choose to pay off the loan early if interest rates change during the next 5 years.

Determine the ending balance of the loan each year under the three different payment plans:

a. the discount loan

b. the interest-only loan

c. the fully amortized loan.

a.If Chuck chooses the discount loan, what is the ending balance of the discount loan in year 1?

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