What is the total amount that need to pay in the five years

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Suppose you plan to borrow $50,000 from a financial institution and you are required to repay the loan by making equal annual payments for five years (payment at the end of each year). The interest rate for the loan is 4% per year.

Problem 1: If instead, the loan is an interest-only loan, you are required to pay interest on the original loan amount at the end of each year for five years, and to repay the entire loan amount at the end of the loan period. What is the total amount that you need to pay (interest plus loan amount) in the five years period?

Reference no: EM132985725

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