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Homework answers / question archive / Gwen Taylor borrows $50,000 from her bank on January 1
Gwen Taylor borrows $50,000 from her bank on January 1. She is to repay the loan in equal annual installments over 30 years. How much is her annual repayment if the bank charges 10 percent interest? Present value tables or a financial calculator are required.
Answer:
D . $ 5,304
Step-by-Step explanation
Present value of annuity = Annuity * [{ 1 - 1/(1+r) ^n} / r]
$50,000 = A * [{1 - 1/(1.1 )^30} / 0.10]
A = $50,000 / 9.43 = $5,304
Therefore, Gwen Taylor's annual payment will be $5,304.
