Question

huck Ponzi has talked an elderly woman into loaning him ​$30 comma 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 ​$30 comma 000 with an annual interest rate of 11​% over the next 15 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.

Answer 1

The woman will receive $ 4,171.96 per year.

Step-by-step explanation:

We need to determinate the PTM of a 15 years' ordinary annuity which present value is 30,000 discounted at 11%

`PV / (1-(1+r)^(-time) )/(rate) = C\\`

PV $30,000.00

time 15

rate 0.11

`30000 / (1-(1+0.11)^(-15) )/(0.11) = C\\`

C $ 4,171.957