Question

A loan of $50,000 is to be repaid in 8 equal end-of-year payments at 10% a. After 3 years, how much of the loan would be paid? b. How much would it cost to buy down the interest to 9%?​

Answer 1

a) = 13550 paid by end yr 3 b) 36450 * 0. 01 = $364.5 buy down interest by 1%

Explanation:

50000 * 0.10 = 5000 paid yr 1 = 5000 /8 = 625 per payment 45000 * 0.10 = 4500 paid yr2 40500 *0. 10 = 4050 paid 40500-4050= 36450 left to pay 50000-36450 = 13550 paid b) 36450 * 0. 01 = $364.5 buy down interest by 1%