Computation of repayment of loan

Assignment Help Finance Basics

Reference no: EM13825778

Problem:

Suppose you take out a loan of $10,000, repayable by five equal annual installments. The interest rate is 10% per year.

(a) How much do you need to repay per year to the nearest cent if payments are due:

(i) at the beginning of each year (ii) at the end of each year?

(b) Which loan in part (a) is preferable, (i) or (ii)? Explain your answer.

Additional Information:

This question belongs to the Finance and it describes about computation of repayment of loan at the beginning and end of each year and whether or not it is preferable.

Reference no: EM13825778

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