Please explain step by step 2.What is the size of 8 equal annual payments to repay a loan of $1,000? The first payment is due oneyear after receiving the loan? The interest rate is 10% per year.Hint: The constant amount or payment (PMT) per interest period is calculated by usingThe Formula: (at_Page 21)a.PV(RATE(1+ RATE)NPER(1 + RATE)NPER – 1PMT =RATE= effective interest rate per interest periodNPER= number of compounding (interest) periodsPV = present value or principle or initial amount at the startFV = final value or future amount at the end of N period;

Installment is the amount of periodic payments a borrower makes to its lender in order to pay back…

Answered: 2. What is the size of 8 equal annual…

2. What is the size of 8 equal annual payments to repay a loan of $1,000? The first payment is due one year after receiving the loan? The interest rate is 10% per year.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 31P

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Question

Please explain step by step

2.
What is the size of 8 equal annual payments to repay a loan of $1,000? The first payment is due one
year after receiving the loan? The interest rate is 10% per year.
Hint: The constant amount or payment (PMT) per interest period is calculated by using
The Formula: (at_Page 21)
a.
PV(RATE(1+ RATE)NPER
(1 + RATE)NPER – 1
PMT =
RATE
= effective interest rate per interest period
NPER
= number of compounding (interest) periods
PV = present value or principle or initial amount at the start
FV = final value or future amount at the end of N period;

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