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siniylev [52]
3 years ago
12

You need $20,000 to purchase a used car. Your wealthy uncle is willing to lend you the money as an amortized 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 8% annual return. What will be your annual loan payments? Round your answer to the nearest cent. Do not round intermediate calculations
Business
1 answer:
Serga [27]3 years ago
4 0

Answer:

The annualy payment for theamortized loan is $6,802.44

Explanation:

First we will find the total loan payment TP for the $20,000 borrowed over the next four years with a annual return of 8%:

TP = $20,000 *(1+8%)^4

TP = $20,000 *(1.08)^4

TP = $20,000 *1.3605 = $27,209.7

The annual payments AN is obtained by dividing the TP into the 4 years:

AN  = $27,209.7 / 4 = $6,802.44

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