A loan of $1,000 is made at an interest rate of 11% compounded quarterly. The loan is to be repaid with three payments: $400 at the end of the first year, $ 600 at the end of the fifth year, and the balance at the end of the tenth year. Calculate the amount of the final payment. Final Payment

A loan of $1,000 is made at an interest rate of 11% compounded quarterly. The loan is to be repaid with three payments: $400 at the end of the first year, $ 600 at the end of the fifth year, and the balance at the end of the tenth year. Calculate the amount of the final payment. Final Payment

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter19: Lease And Intermediate-term Financing

Section: Chapter Questions

Problem 19P

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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.

Question

A loan of $1,000 is made at an interest rate of 11% compounded quarterly. The loan is to be repaid with three payments: $ 400 at the end of the first
year, $ 600 at the end of the fifth year, and the balance at the end of the tenth year. Calculate the amount of the final payment.
Final Payment

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