Find the size of each payment

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Reference no: EM131924008

SHOW . Eric borrows $50,000 from Friendly Finance Company and agrees to make 10 equal annual payments in return, with the first payment due in one year are certain, but, starting from the sixth year, there is a 10% chance of default in any year. Assuming that the rate of interest is 8% and that if once default occurs, no further payments will be made, find the size of each payment.

Reference no: EM131924008

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