Indifferent between the two forms of payment

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Reference no: EM131933918

You have a loan outstanding. It requires making 4 annual payments at the end of the next 4 years of $4,000 each. Your bank has offered to allow you to skip making the next 3 payments in lieu of making one large payment at the end of the loan's term in 4 years. If the interest rate on the loan is 8.19%, what final payment will the bank require you to make so that it is indifferent between the two forms of payment?

Reference no: EM131933918

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