Question 3: Huntington Medical Association (HMA) borrowed $100,000 at annual interest rate of 10% (compounded annually)....

 

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Question 3: Huntington Medical Association (HMA) borrowed $100,000 at annual interest rate of 10% (compounded annually). HMA pays off the entire loan with equal annual payments (A) regularly for 'N' years (N unknown to us). It is known, however, that $4000 from the third payment went towards principal. What is the size of those equal annual payments (A)? [Hint: At a year, interest component of A (IPMT) is calculated on the previous year's balance.] Question 3: Huntington Medical Association (HMA) borrowed $100,000 at annual interest rate of 10% (compounded annually). HMA pays off the entire loan with equal annual payments (A) regularly for 'N' years (N unknown to us). It is known, however, that $4000 from the third payment went towards principal. What is the size of those equal annual payments (A)? [Hint: At a year, interest component of A (IPMT) is calculated on the previous year's balance.]

Answer rating: 100% (QA)

To calculate the size of the equal annual payments A we can use the formula for the loan payment ... View the full answer