Kingsley Toyota borrowed $130,000 from a local bank. The loan requires Kingsley

Question

Kingsley Toyota borrowed $130,000 from a local bank. The loan requires Kingsley to pay 10 equal annual installments beginning one year from today. Assume an interest rate of 9%, what is the amount of each annual installment payment? (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)

Kingsley Toyota borrowed $130,000 from a local bank. The loan requires Kingsley to pay 10 equal annual installments beginning one year from today. Assume an interest rate of 9%, what is the amount of each annual installment payment? (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)

Table or calculator function: Loan Amount: n = i = Loan Payment:

Kingsley Toyota borrowed $130,000 from a local bank. The loan requires Kingsley to pay 10 equal annual installments beginning one year from today. Assume an interest rate of 9%, what is the amount of each annual installment payment?

Explanation / Answer

LOAN AMOUNT - 130,000$

TIME= 10

INTEREST =.09

present amount of loan = annual payment*[1-{(1+interest)^time}/ interest

present amount = annual payment*{PVA(n=10,i=9%)}

130000=annual payment(6.41766)

annual payment = 20256.60443$

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