Answered step by step
Verified Expert Solution
Question
1 Approved Answer
You have a loan outstanding. It requires making eight annual payments of $1,000 each at the end of the next eight years. Your bank has
You have a loan outstanding. It requires making eight annual payments of $1,000 each at the end of the next eight years. Your bank has offered to allow you to skip making the next two payments in lieu of making one large payment at the end of the loan's term in eight years. If the interest rate on the loan is 1%, what final payment will the bank require you to make so that it is indifferent to the two forms of payment?
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