You have a loan outstanding. It requires making 8 annual payments at the end of the next 8 years of $8,000 each. Your bank has offered to allow you to skip making the next 7 payments in lieu of making one large payment at the end of the loan's term in 8 years. If the interest rate on the loan is 9.81%, what final payment will the bank require you to make so that it is indifferent between the two forms of payment? The present value of the cash flows is $ (Round to the nearest cent.)
You have a loan outstanding. It requires making 8 annual payments at the end of the next 8 years of $8,000 each. Your bank has offered to allow you to skip making the next 7 payments in lieu of making one large payment at the end of the loan's term in 8 years. If the interest rate on the loan is 9.81%, what final payment will the bank require you to make so that it is indifferent between the two forms of payment? The present value of the cash flows is $ (Round to the nearest cent.)
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:You have a loan outstanding. It requires making 8 annual payments at the end of the next 8 years
of $8,000 each. Your bank has offered to allow you to skip making the next 7 payments in lieu of
making one large payment at the end of the loan's term in 8 years. If the interest rate on the loan
is 9.81%, what final payment will the bank require you to make so that it is indifferent between the
two forms of payment?
The present value of the cash flows is $
(Round to the nearest cent.)
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