You have a loan outstanding. It requires making six annual payments of $ 6 comma 000 each at the end of the next six years. Your bank has offered to restructure the loan so that instead of making the six payments as originally agreed, you will make only one final payment in six years. If the interest rate on the loan is 7 %, what final payment will the bank require you to make so that it is indifferent to the two forms of payment?

Question

contestada

Respuesta :

agustinsr99 agustinsr99 · Answer 1 · 2019-10-07T17:00:25+02:00

Answer: The final payment would be: $42919,74.

Explanation: To simplify the work we must make a timeline:

0 1 2 3 4 5 6

$6000 $6000 $6000 $6000 $6000 $6000

These would be the normal conditions of the loan.

but if instead of making the 6 payments only one is made at the end:

We must use the FV annuity formula:

6000 × [tex]\frac{(1+0,07)^{6} - 1 }{0,07}[/tex] = 42919,74