A man borrowed Php 120,000 and promised to pay annually for 5 years. The payment starts at "X" pesos. The man intends to increase his payments by Php 5,000 at the end of each successive year. If the interest rate is 8% compounded annually, how much will the first payment be? If the man decides to pay annually with 8 equal payments with the first payment to be made after 4 years, what will be the amount of the annual payment? Construct the cash flow diagram for both cases.

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Q: A man borrowed Php 120,000 and promised to pay annually for 5 years The payment starts at “X pesos…

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Q: Find the annual deposit

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A:

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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.