Both forms of payment are equivalent

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Reference no: EM131985517

A bank is negotiating a loan. The loan can either be paid off as a lump sum of $110,000 at the end of 4 years, or as equal annual payments at the end of each of the next 4 years.

If the interest rate on the loan is 6.1% regardless of the payment method, what annual payments should be made so that both forms of payment are equivalent?

Reference no: EM131985517

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