Sylvia Owen, owner of I-Haul Trucking is considering expanding operations from Seattle

to the Portland area. Expansion is estimated to cost $10 million including the required new

facilities and additional trucks. Owen has elected to finance the expansion by borrowing from

her local bank at a yearly interest rate of 10%. She has agreed to repay the loan in twenty

equal payments over a 10-year period to begin in one year.

a. What will Ms. Owens periodic payments be?

b. How much of her first payment will be interest expense?

c. Assume that after ten years, Ms. Owen decided to pay off the loan early. How much would

she owe at that time?