You borrow $10,000 today with interest rate 7%, and you plan to pay the bank back with 8 equal annual payment. Let us assume the first payment happen at the end of each year.

(a) how much is the annual payment?

b) You borrow $10,000 today with interest rate 7%, and you plan to pay the bank back with 8 equal annual payment - How much is the interest payment for year 3?

c) You borrow $10,000 today with the interest rate 7%, and you plan to pay the bank back with 8 equal annual payments. - How much is the balance of the principle at the end of year 8?

 

Principal beg. Payment end year Interest Principal Year year 2 4 6. 7 8 3.