Lowlife Company defaulted on a $250,000 loan that was due on December 31, 2011. The bank has agreed to allow Lowlife to repay the $250,000 by making a series of equal annual payments beginning on December 31, 2012.

Required:

1. Calculate the required annual payment if the bank's interest rate is 10% and four payments are to be made.

2. Calculate the required annual payment if the bank's interest rate is 8% and five payments are to be made.

3. If the bank's interest rate is 10%, how many annual payments of $51,351 would be required to repay the debt?

4. If three payments of $104,087 are to be made, what interest rate is the bank charging Lowlife?

 

LOWLIFE COMPANY
Amount of loan	$ 250,000
Part 1:
Interest rate	10%
Number of payments	4
Part 2:
Interest rate	8%
Number of payments	5
Part 3:
Interest rate	10%
Annual payment amount	$ 51,351
Part 4:
Number of payments	3
Annual payment amount	$ 104,087