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You have a loan outstanding. It requires making four annual payments of $8,000 each at the end of the next four years. Your bank has
You have a loan outstanding. It requires making
four
annual payments of
$8,000
each at the end of the next
four
years. Your bank has offered to restructure the loan so that instead of making the
four
payments as originally agreed, you will make only one final payment in
four
years. If the interest rate on the loan is
9%,
what final payment will the bank require you to make so that it is indifferent to the two forms of payment?
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