Quantitative Problem: You need $11,000 to purchase a used car. Your wealthy uncle is willing to lend you the money as an amortiz

Question

3 years ago

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Quantitative Problem: You need $11,000 to purchase a used car. Your wealthy uncle is willing to lend you the money as an amortiz

ed loan. He would like you to make annual payments for 4 years, with the first payment to be made one year from today. He requires a 9% annual return. What will be your annual loan payments

Business

1 answer:

Ratling [72] · Answer 1 · 2022-05-30T07:20:53+03:00

Answer:

The annual loan payments are closest to $3,395.36

Explanation:

The annual payment on the amortized loan can be ascertained using the pmt formula in excel :

=pmt(rate,nper,-pv,fv)

rate is the 9% annual return expected by the uncle

nper is the length of repayment which is 4 years

pv is the amount borrowed which is $11,000

fv is the future worth of the loan which is unknown

=pmt(9%,4,-11000,0)=$3,395.36