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I borrowed $10,000 for 7 years with annual payments
I borrowed $10,000 for 7 years with annual payments. If I borrow the money at 15%, what will my annual payment be?
Expert Solution
Annual loan payment
Loan amount (P) = $10,000
Annual interest rate (r) = 15%
Loan period (n) = 7 Years
The Annual Loan Payment = [P x {r (1+r) n}] / (1+r) n – 1
= [$10,000 x {0.15 x (1 + 0.15)7}] / [(1 + 0.15)7 – 1]
= [$10,000 x {0.15 x 2.66001988}] / [2.66001988 – 1]
= [$10,000 x 0.399002982] / 1.66001988
= $3,990.03 / 1.66001988
= $2,403.60 per year
Therefore, the annual loan payment will be $2,403.60
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