You have a loan outstanding. It requires making 8 annual payments at the end of the next 8 years of $8,000 each. Your bank has offered to allow you to skip making the next 7 payments in lieu of making one large payment at the end of the loan's term in 8 years. If the interest rate on the loan is 4.75%, what final payment will the bank require you to make so that it is indifferent between the two forms of payment?

You have a loan outstanding. It requires making 8 annual payments at the end of the next 8 years of $8,000 each. Your bank has offered to allow you to skip making the next 7 payments in lieu of making one large payment at the end of the loan's term in 8 years. If the interest rate on the loan is 4.75%, what final payment will the bank require you to make so that it is indifferent between the two forms of payment?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter19: Lease And Intermediate-term Financing

Section: Chapter Questions

Problem 14P

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