Question
You have a loan outstanding. It requires making 8 annual payments at the end of the next 8 years of $9,000 each. Your bank has
You have a loan outstanding. It requires making 8 annual payments at the end of the next 8 years of $9,000 each. Your bank has offered to allow you to skip making the next 7 payments in lieu of making one large payment at the end of the loan's term in 8 years. If the interest rate on the loan is 4.78%, what final payment will the bank require you to make so that it is indifferent between the two forms of payment?
The present value of the cash flows is$ -------
The future value is $---------
Please show work. I am struggling to solve this by hand.
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