Answered: You borrow 10.000 USD for 4 years to be…

You borrow 10.000 USD for 4 years to be paid with equal installments. The rate is 10% a-what is the annual payment? b-what is the remaining principal after 2 payments

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter4: Time Value Of Money

Section4.17: Amortized Loans

Problem 1ST

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Concept explainers

Amortized Loans

The term "amortization" refers to spreading the value of a loan or a debt over a series of regular payments or installments comprising of both the principal and interest amount. It generally involves the process where in the value of a loan or an intangible asset is written down over its maturity period.

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You borrow 10.000 USD for 4 years to be paid with equal installments. The rate is 10%

a-what is the annual payment?

b-what is the remaining principal after 2 payments

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