You have a loan outstanding. It requires making seven annual payments of $5,000 each at the end of the next seven years. Your bank has offered to allow you to skip making the next six payments in lieu of making one large payment at the end of the loan's term in seven years. If the interest rate on the loan is 3%, what final payment will the bank require you to make so that it is indifferent to the two forms of payment?

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To find the final payment that makes the bank indifferent we need to calculate the pres... View the full answer