A loan 1000 is repaid by equal annual amounts of principal for 10 years and annual interest of 7% on the outstanding balance. (a) What is the schedule of loan payment? Draw the amortization schedule table from time 0 to time 3. (b) What is the present value of the payments in (a) at 7% effective? (c)What is the purchase price of this loan to yield 5% effective?
A loan 1000 is repaid by equal annual amounts of principal for 10 years and annual interest of 7% on the outstanding balance. (a) What is the schedule of loan payment? Draw the amortization schedule table from time 0 to time 3. (b) What is the present value of the payments in (a) at 7% effective? (c)What is the purchase price of this loan to yield 5% effective?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Part A,solution should be mathematically explained (no excel or computer code)
Transcribed Image Text:A loan 1000 is repaid by equal annual amounts of principal for 10 years and annual
interest of 7% on the outstanding balance.
(a) What is the schedule of loan payment? Draw the amortization schedule table
from time 0 to time 3.
(b) What is the present value of the payments in (a) at 7% effective?
(c)What is the purchase price of this loan to yield 5% effective?
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