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Repaid in five equal annual installments

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The Pinea Corporation obtains a bank loan that is disbursed as follows: Shs 320 million, Shs 240 million, Shs 160 million and Shs 80 million at the beginning of years one, two, three, and four respectively. The loan is repaid in five equal annual installments of Shs 300 million at the end of years four to eight, and a final amount at the beginning of year 12. Given a rate of inflation of 3.0% p.a during the period, and if Pinea's real cost of the loan is 14% p.a, what should the final repayment be?

Reference no: EM132528533

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