Equal end of year payments of $263.80 each are being made on a $1,000 loan at 15% per year compounded monthly. a. How many payments are required to repay the entire loan? b. Immediately after the third payment, what lump sum amount would completely pay off the loan?

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter16: Working Capital Policy And Short-term Financing
Section: Chapter Questions
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Equal end of year payments of $263.80 each are being made on a $1,000 loan at 15% per year compounded monthly. a. How many payments are required to repay the entire loan? b. Immediately after the third payment, what lump sum amount would completely pay off the loan? INCLUDE THE CASH FLOW DIAGRAM OF THIS PROBLEM AND ROUND OFF INTEREST RATE TO 5 DECIMAL PLACES AND YOUR FINAL ANSWER TO 2 DECIMAL PLACES. Handwritten solution. Use only engineering economy formula.
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