Question

Huntington Medical Association (HMA) borrowed $100,000 at annual interest rate of 10% (compounded annually). HMA pays off the entire loan with equal annual payments (A) regularly for ' N ' years ( N unknown to us). It is known, however, that $4000 from the third payment went towards principal. What is the size of those equal annual payments (A)?

Answer 1

Without additional information, the exact equal annual payment (A) the Huntington Medical Association must make to pay off a $100,000 loan at 10% interest compounded annually cannot be determined from the given information.

Step-by-step explanation:

The Huntington Medical Association borrowed $100,000 at an annual interest rate of 10% compounded annually, with the size of the equal annual payments unknown. Given that $4,000 from the third payment went towards the principal, we need to find the size of these equal annual payments. To calculate this, an amortization formula or a financial calculator would typically be used, but not enough details are provided to complete the formula (such as total number of payments, or the amount of the payment). Therefore, without additional information, the exact equal annual payment (A) cannot be determined from the given scenario.