Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

You have a loan outstanding. It requires making seven annual payments of $ 1 comma 000 each at the end of the next seven years.

You have a loan outstanding. It requires making seven annual payments of $ 1 comma 000 each at the end of the next seven years. Your bank has offered to restructure the loan so that instead of making the seven payments as originally agreed, you will make only one final payment in seven years. If the interest rate on the loan is 10 %, 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

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

Rich Dads Increase Your Financial IQ Get Smarter With Your Money

Authors: Robert T. Kiyosaki

1st Edition

1612680658, 978-1612680651

More Books

Students also viewed these Finance questions

Question

What are the major parts of an e-mail message?

Answered: 1 week ago

Question

How do exchange-traded funds (ETFs) differ from mutual funds?

Answered: 1 week ago