Annuity is the amount paid in equal installments after fixed time intervals (usually months) to repay a loan. It consist a part of the principal as well as Interest on the outstanding principal. Initially in the Annuity, The interest portion is bigger than the portion of outstanding principal and it keeps reversing over the tenure of loan. The loan is fully settled after the last installment. It is an easy way to pay back principal and interest amount according to the pre-determined tenure.
To Calculate:
The monthly payment to repay a loan of $30,000 in 10 years at the annual percentage rate of 4.66%.
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Fundamentals of Corporate Finance Plus MyLab Finance with Pearson eText -- Access Card Package (4th Edition) (Pearson Series in Finance)
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