A loan of XX is repaid with level annual payments at the end of each year for 10 years. You are given: i. The interest paid in the first year is 3,600; and ii. The principal repaid in the 6th year is 4,871. Calculate XX.

Question

Hailey Morgan

Business

19 November, 01:43

A loan of XX is repaid with level annual payments at the end of each year for 10 years. You are given: i. The interest paid in the first year is 3,600; and ii. The principal repaid in the 6th year is 4,871. Calculate XX.

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Answers (1)

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Giovanny Davies · Answer 1

XX is 48000

Explanation:

The use of Microsoft excel is essential for this.

Consider that the principal is XX

and time for repayment is 10 years

Simple Interest = (Principal*Rate*Time) / 100

If the 1st year interest = 3600

Then Principal = (3600*100) / rate

And rate can be calculated as (3600*100) / principal

But in this case, since we are dealing with percentage in rate, say

rate = 3600/principal

The rate will be equal to 7.5%

If rate is 7.5%

Then Principal = (3600*100) / 7.5

Principal XX = 48000