A $10,000 loan amortized over 5 years at an interest rate of 10% per year would require payments of $2638 to completely extinguish the loan when interest is charged on the unrecovered balance. If interest is charged on the principal instead of the unrecovered balance, what would be the balance after 5 years if the same $2638 payments are made each year?

A $10,000 loan amortized over 5 years at an interest rate of 10% per year would require payments of $2638 to completely extinguish the loan when interest is charged on the unrecovered balance. If interest is charged on the principal instead of the unrecovered balance, what would be the balance after 5 years if the same $2638 payments are made each year?

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter4: Time Value Of Money

Section4.17: Amortized Loans

Problem 1ST

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