Consider a 4-year variable-rate loan whose annual interest rate changes every year:

During the first year, the annual interest rate is 3%

During the second year, annual interest rate is 6%

During the third year, annual interest rate is 9%

During the fourth year, annual interest rate is 12%

The initial loan amount is $100,000. What constant annual payment, made at the end of each year, is needed to payoff the loan entirely at the end of the fourth year? Please assume simple compounding of interest, not continuous compounding.

Please round your numerical answer, in dollars, to two decimal places.

Answer rating: 100% (QA)

Solution The payment required to payoff the loan at the end of the fourth year can be calculated usi... View the full answer