Question

Tom borrows $100,000 at an annual effective interest rate of 4% and agrees to repay it with 30 annual installments. The amount of each payment in the last 20 years is set at twice that in the first 10 years. At the end of 10 years, Tom has the option to repay the entire loan with a final payment of $X, in addition to the regular payment. This will yield the lender an annual effective rate of 4.5% over the 10-year period. Calculate $X? Please show all work and timeline.

Name: tom borrows 10000 at annual effective interest rate of 4 and agrees to repay it with 30 annual installments the amount of each payment in the last 20years is set at twice that in the first 1 38756
Uploaded: 2022-06-03T14:29:42-08:00
Duration: 3 min 54 s
Channel: Shaiju T
Description: tom borrows 10000 at annual effective interest rate of 4 and agrees to repay it with 30 annual installments the amount of each payment in the last 20years is set at twice that in the first 1 38756

          Tom borrows $100,000 at an annual effective interest rate of 4% and agrees to repay it with 30 annual installments. The amount of each payment in the last 20 years is set at twice that in the first 10 years. At the end of 10 years, Tom has the option to repay the entire loan with a final payment of $X, in addition to the regular payment. This will yield the lender an annual effective rate of 4.5% over the 10-year period. Calculate $X? Please show all work and timeline.

Added by Jose Ignacio H.

Calculus: Early Transcendentals

James Stewart 8th Edition

Instant Answer

Solved by Expert Shaiju T

06/03/2022

Step 1

04)^{-10}\right) / 0.04 \] \[ 100,000 = PMT \times \left(1 - (1.04)^{-10}\right) / 0.04 \] \[ 100,000 = PMT \times \left(1 - 0.67556\right) / 0.04 \] \[ 100,000 = PMT \times 0.32444 / 0.04 \] \[ PMT = 100,000 / 0.0129776 \] \[ PMT \approx 7,709.25 \] Show more…

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Tom borrows $100,000 at an annual effective interest rate of 4% and agrees to repay it with 30 annual installments. The amount of each payment in the last 20 years is set at twice that in the first 10 years. At the end of 10 years, Tom has the option to repay the entire loan with a final payment of $X, in addition to the regular payment. This will yield the lender an annual effective rate of 4.5% over the 10-year period. Calculate $X? Please show all work and timeline.