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07.09.2021 17:49
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Assume you borrow $10,000 today and promise to repay the loan in two payments, one

Assume you borrow $10,000 today and promise to repay the loan in two payments, one in year 2 and the other in year 4, with the one in year 4 being only half as large as the one in year 2. At an interest rate of 10% per year, the size of the payment in year 4 will be closest to:
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wazzuphottie1999
wazzuphottie1999
5,0(53 marks)

$4,281.19

Explanation:

The standard notation equation is P = F(P/F, i, n) where the value of the factor is seen in the compound interest factor table.

Let the amount deposited in year 4 be A, we calculate the value of A as follows

10,000 = 2A(P/F, 10%, 2) + A(P/F, 10%, 4)

10,000 = 2A(0.8263) + A(0.683)

2.3358A = 10,000

A = 10,000 / 2.3358

A = 4281.188457915917

A = $4,281.19.

solidermorrison9209
solidermorrison9209
5,0(73 marks)
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d. A service charge is a fee assessed by a lender other than interest, and a finance charge is the total of the interest paid on a loan and the service charge.

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