6.Q5: Suppose that you would like to borrow £75000 loan from a bank to establish a newbusiness. You wish to repay it monthly over 10 years. The current interest rate is 7%. What isthe monthly payment to pay-off the loan assuming that interest rate remains the same over 10years?708.813780.813870.813807.813

will reflect all the payments of annuity for 10 years (10*12=120 times) for the yearly interest rate…

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EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter4: Time Value Of Money

Section: Chapter Questions

Problem 5PROB

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Question

6.
Q5: Suppose that you would like to borrow £75000 loan from a bank to establish a new
business. You wish to repay it monthly over 10 years. The current interest rate is 7%. What is
the monthly payment to pay-off the loan assuming that interest rate remains the same over 10
years?
708.81
3
780.81
3
870.81
3
807.81
3

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Step 1 The present value of the loan Pound 75000

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Step 2 So 75000= 86.12798 *x

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