Five years ago, an investor borrowed $5000 from a financial institution that charged 6% annual interest and immediately took his family to live in Nerpal. He made no payments during the time he was away. When he returned, he agreed to repay the orinignal loan pluis the accrued interest by making 4 endofyear payments starting one hear after he returned. If the ineetest erate on the loan is held constant at 6% per year, what annual payment must the investor make in order to retire the laon?
A 1338.23
B 1588.45
C 1638. 23作者: LokiDog2 时间: 2011-7-13 16:55
5000* (1.06) ^5 = 6691
Annuity = PMT(6%;4;6691;) = 1931???
I think there is a typo since if I change to 5 end of year payments instead of 4, I will have 1588,45作者: Ionutzakis 时间: 2011-7-13 16:55
elcfa..thanks a lot...yes there was a typo -5 not 4...
my confusion is between accrued interest and interest payments...more like a coupon and a discount bond... am I missing something basic here?
I went about 300X10=3000
Annuity=PMT(6%,5,3000+5000)=1899
It appears I need real help here...what tells you between a coupon payment vs just accrual?作者: farrukhsadiq 时间: 2011-7-13 16:55
lol I see. So thats the bank standard huh interest compound on interest.
