A government decided to make a 25-year loan on $2,500,000 at 10% interest to a "Toll Road Authority". Four year of the loan period was to be spent to build the road during which time the government agreed to "capitalize" the interest until the road is completed and toll collection has started in the 5th year. $500,000 was expected to be spent each of the first two years and the rest also equally in the 3rd and 4th years. What annual payment by the Toll Authority would repay the loan (principal plus interest) over the remaining 21 years?

A government decided to make a 25-year loan on $2,500,000 at 10% interest to a "Toll Road Authority". Four year of the loan period was to be spent to build the road during which time the government agreed to "capitalize" the interest until the road is completed and toll collection has started in the 5th year. $500,000 was expected to be spent each of the first two years and the rest also equally in the 3rd and 4th years. What annual payment by the Toll Authority would repay the loan (principal plus interest) over the remaining 21 years?

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

ChapterA: Appendix - Time Value Of Cash Flows: Compound Interest Concepts And Applications

Section: Chapter Questions

Problem 24E

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