Fully amortized loan (annual payments for principal and interest with the same amount each year). Chuck Ponzi has talked an elderly woman into loaning him $40,000 for a new business venture. She has, however, successfully passed a finance class and requires Chuck to sign a binding contract on repayment of the $40,000 with an annual interest rate of 9% over the next 10 years. Determine the cash flow to the woman under a fully amortized loan, in which Ponzi will make equal annual payments at the end of each year so that the final payment will completely retire the original $40,000 loan. What is the amount of payment that the woman will receive at the end of years 1 through 10?
Fully amortized loan (annual payments for principal and interest with the same amount each year). Chuck Ponzi has talked an elderly woman into loaning him $40,000 for a new business venture. She has, however, successfully passed a finance class and requires Chuck to sign a binding contract on repayment of the $40,000 with an annual interest rate of 9% over the next 10 years. Determine the cash flow to the woman under a fully amortized loan, in which Ponzi will make equal annual payments at the end of each year so that the final payment will completely retire the original $40,000 loan. What is the amount of payment that the woman will receive at the end of years 1 through 10?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Fully amortized loan (annual payments for principal and interest with the same amount each year). Chuck Ponzi has talked an elderly woman into loaning him
$40,000
for a new business venture. She has, however, successfully passed a finance class and requires Chuck to sign a binding contract on repayment of the
$40,000
with an annual interest rate of
9%
over the next
10
years. Determine the cash flow to the woman under a fully amortized loan, in which Ponzi will make equal annual payments at the end of each year so that the final payment will completely retire the original
$40,000
loan.What is the amount of payment that the woman will receive at the end of years 1 through
10?
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