A loan is repayable by a decreasing annuity payable annually in arrears for 20 years. The repayment at the end of the first year is $6,000 and subsequent repayments reduce by $200 each year. The repayments were calculated using an effective rate of interest of 9% per annum. iginal Immediately after the ninth payment of interest and capital, the interest rate on the outstanding loan is reduced to 7% per annum effective. Calculate the amount of the tenth payment if subsequent payments continue to be reduced by $200 each year, and the loan is to be repaid by the original date, i.e. 20 years from commencement.
A loan is repayable by a decreasing annuity payable annually in arrears for 20 years. The repayment at the end of the first year is $6,000 and subsequent repayments reduce by $200 each year. The repayments were calculated using an effective rate of interest of 9% per annum. iginal Immediately after the ninth payment of interest and capital, the interest rate on the outstanding loan is reduced to 7% per annum effective. Calculate the amount of the tenth payment if subsequent payments continue to be reduced by $200 each year, and the loan is to be repaid by the original date, i.e. 20 years from commencement.
Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)
7th Edition
ISBN:9780357033609
Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Chapter7: Using Consumer Loans
Section: Chapter Questions
Problem 9FPE: Calculating and comparing add-on and simple interest loans. Eli Nelson is borrowing 10,000 for five...
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Transcribed Image Text:A loan is repayable by a decreasing annuity payable annually in
arrears for 20 years. The repayment at the end of the first year is
$6,000 and subsequent repayments reduce by $200 each year.
The repayments were calculated using an effective rate of interest
of 9% per annum.
aloulate
Immediately after the ninth payment of interest and capital, the
interest rate on the outstanding loan is reduced to 7% per annum
effective. Calculate the amount of the tenth payment if subsequent
payments continue to be reduced by $200 each year, and the loan
is to be repaid by the original date, i.e. 20 years from
commencement.
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