Calculate the required annual payment

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Reference no: EM131868643

Lowlife Company defaulted on a $190,000 loan that was due on December 31, 2018. The bank has agreed to allow Lowlife to repay the $190,000 by making a series of equal annual payments beginning on December 31, 2019. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)

Required:

1. Calculate the required annual payment if the bank’s interest rate is 10% and four payments are to be made.

2. Calculate the required annual payment if the bank’s interest rate is 8% and five payments are to be made.

3. If the bank’s interest rate is 10%, how many annual payments of $27,885 would be required to repay the debt?

4. If three payments of $69,117 are to be made, what interest rate is the bank charging Lowlife?

Reference no: EM131868643

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