You have a loan outstanding. It requires making eight annual payments of $8,000 each at the end of the next eight years. Your bank has offered to allow you to skipmaking the next seven payments in lieu of making one large payment at the end of the loan's term in eight years. If the interest rate on the loan is 6%, what finalpayment will the bank require you to make so that it is indifferent to the two forms of payment?The final payment the bank will require you to make is $(Round to the nearest dollar.)

Information Provided: Annual payments = $8000 Interest rate = 6%

Answered: The final payment the bank will require…

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Finance

The final payment the bank will require you to make is $ (Round to the nearest dollar.)

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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Concept explainers

Calculating the Return On A Loan

Question

You have a loan outstanding. It requires making eight annual payments of $8,000 each at the end of the next eight years. Your bank has offered to allow you to skip
making the next seven payments in lieu of making one large payment at the end of the loan's term in eight years. If the interest rate on the loan is 6%, what final
payment will the bank require you to make so that it is indifferent to the two forms of payment?
The final payment the bank will require you to make is $
(Round to the nearest dollar.)

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