A loan is being repaid by 15 annual instllments of 1000 each. Interest is at an effec- ive annual rate of 5%. Immediately after the fifth installment is paid, the loan is renegotiated. The revised amortization schedule calls for a sixth installment of 800, a seventh installment of 300 + K, with each subsequent installment increasing by K over the previous payment. The beriod of the loan is not changed. Determine the revised amount of the last installment.

Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter10: Property, Plant And Equipment: Acquisition And Subsequent Investments
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Problem 3MC: Electro Corporation bought a new machine and agreed to pay for it in equal annual installments of...
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A loan is being repaid by 15 annual instllments of 1000 each. Interest is at an effec-
tive annual rate of 5%. Immediately after the fifth installment is paid, the loan is renegotiated.
The revised amortization schedule calls for a sixth installment of 800, a seventh installment of
800 + K, with each subsequent installment increasing by K over the previous payment. The
period of the loan is not changed. Determine the revised amount of the last installment.
Transcribed Image Text:A loan is being repaid by 15 annual instllments of 1000 each. Interest is at an effec- tive annual rate of 5%. Immediately after the fifth installment is paid, the loan is renegotiated. The revised amortization schedule calls for a sixth installment of 800, a seventh installment of 800 + K, with each subsequent installment increasing by K over the previous payment. The period of the loan is not changed. Determine the revised amount of the last installment.
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