Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

You have a loan outstanding. It requires making four annual payments of $ 8 comma 0 0 0 each at the end of the next

You have a loan outstanding. It requires making four annual payments of $8 comma 000 each at the end of the next four years. Your bank has offered to allow you to skip making the next three payments in lieu of making one large payment at the end of the loan's term in four years. If the interest rate on the loan is 4%, what final payment will the bank require you to make so that it is indifferent to the two forms of payment?
Question content area bottom
Part 1
The final payment the bank will require you to make is $
enter your response here. (Round to the nearest cent.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Fundamentals Of Futures And Options Markets

Authors: John C. Hull

5th Edition

0131445650, 9780131445659

More Books

Students also viewed these Finance questions

Question

What is the equity risk premium, and how is it calculated?

Answered: 1 week ago

Question

Which weighs morea ton of coal or a ton of feathers?

Answered: 1 week ago