I need help figuring out this problem but I need help understanding how to solve

Question

I need help figuring out this problem but I need help understanding how to solve it I don't just need an answer as really the answer is unimportant its just me knowing how to solve a problem like this.

How much money would be required to be paid each year in nine equal payments that would begin two years from today in order to repay a 10,416 loan that was received from the bank today while the interest rate is 6% per year.

Thanks for anyone who can help me understand how to solve this problem with detailed steps and explanations.

Explanation / Answer

okay. so do you have financial calculator? because it makes calculating loans and annuities like this much much easier. 1. Draw a timeline. 0 = Pv = 10,416 2 = Fv = new Pv for loans repayment = 11,703.4176 --> PMT = -? 3 = PMT = -? . . . 9 = Fv = 0 So basically, what you do is that first, you find the future value of the principal after 2 years. This future value is also the present value for the loan repayment. After calculating the FV for year 2, which becomes the new PV for the whole loan repayment timeline, you have: n = 9 ir = 6% PV = 11,703.4176 FV = 0 calculate for PMT using financial calculator PMT = 1,170.6626 Hope that helps! If you have any further question, feel free to comment on it :)

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