Answered: a) How much is the principal repayment…

a) How much is the principal repayment in the first year for a USD 100'000 annuity loan with an interest rate of 2.5% and a maturity of 4 years rounded to the next whole number?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter19: Lease And Intermediate-term Financing

Section: Chapter Questions

Problem 18P

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Concept explainers

Amortized Loans

The term "amortization" refers to spreading the value of a loan or a debt over a series of regular payments or installments comprising of both the principal and interest amount. It generally involves the process where in the value of a loan or an intangible asset is written down over its maturity period.

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a) How much is the principal repayment in the first year for a USD 100'000 annuity loan with an
interest rate of 2.5% and a maturity of 4 years rounded to the next whole number?

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