If your uncle borrows $56,000 from the bank at 10 percent interest over the eight-year life of the loan. Use Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods. a. What equal annual payments must be made to discharge the loan, plus pay the bank its required rate of interest? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)

Question

Andrew Fletcher

Business

26 July, 20:50

If your uncle borrows $56,000 from the bank at 10 percent interest over the eight-year life of the loan. Use Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods. a. What equal annual payments must be made to discharge the loan, plus pay the bank its required rate of interest? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)

+1

Answers (1)

Know the Answer?

Ramiro Shelton · Answer 1

a. Annually equal instalment = Principal x rate x ((1+rate) n / (1+rate) n - 1)

Explanation:

Accrding to the following formula, we calculate the anually equal instalment.

So, instalment = 56000 x 0.10 x ((1.10) 8 / (1.10) 8 - 1) = $10496.86498 ~ $10496.86