Question
Lowlife Company defaulted on a $130,000 loan that was due on December 31, 2021. The bank has agreed to allow Lowlife to repay the $130,000
Lowlife Company defaulted on a $130,000 loan that was due on December 31, 2021. The bank has agreed to allow Lowlife to repay the $130,000 by making a series of equal annual payments beginning on December 31, 2022. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 1. Calculate the required annual payment if the banks interest rate is 10% and four payments are to be made.
2. Calculate the required annual payment if the banks interest rate is 8% and five payments are to be made. 3. If the banks interest rate is 10%, how many annual payments of $34,294 would be required to repay the debt?
4. If three payments of $51,357 are to be made, what interest rate is the bank charging Lowlife?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started