1. Suppose you borrow $300,000 now at 10% interest, compounded annually. You will repay the borrowed amount plus interest in a lump sum at the end of 4 years. How much must you repay? Use Table B-1 (page A6) and the basic equation PV = future amount * conversion factor.
2. Assume the same facts as previously except that you will repay the loan in equal installments at the end of each of the 4 years. How much must you repay each year? Use Table B-2 (page A-9) and the basic equation: PV = future annual amounts * conversion factor.

  • CreatedNovember 19, 2014
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