Jack has borrowed $1,000,000 from MQ Bank for 10 years at an interest rate of j2=3.53%. He will make 10 annual repayments. According to the loan agreement, Jack's repayments will be $83,000 for the first two years followed by payments of with the amount of X per year for the remaining eight years. This loan needs to be fully repaid by the end of 10 years. (b) Assume that all annual repayments will be paid at the beginning of
Jack has borrowed $1,000,000 from MQ Bank for 10 years at an interest rate of j2=3.53%. He will make 10 annual repayments. According to the loan agreement, Jack's repayments will be $83,000 for the first two years followed by payments of with the amount of X per year for the remaining eight years. This loan needs to be fully repaid by the end of 10 years. (b) Assume that all annual repayments will be paid at the beginning of
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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Transcribed Image Text:Jack has borrowed $1,000,000 from MQ
Bank for 10 years at an interest rate of
j2=3.53%. He will make 10 annual repayments.
According to the loan agreement, Jack's
repayments will be $83,000 for the first two
years followed by payments of with the
amount of X per year for the remaining eight
years. This loan needs to be fully repaid by
the end of 10 years. (b) Assume that all annual
repayments will be paid at the beginning of
each year (the first payment will be at the
start of the first year), what is the value of
Jacks' annual payment amount X (rounded to
four decimal places)?
a. 121891.6942 b. 126194.4711 c. 126400.1541
d. 122053.6382
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