1 answer

Loan Repayment / Amortization

Question:

A loan of $12,500 is made at an effective interest rate of 8.5%. Payments are made at the end of each interest period. Each payment equals twice the interest due untilthe borrower pays off the outstanding debt with a final payment of, at most, $1,800. Find the number of payments n and the amount of the final payment.
** The answers are n = 24, and the final payment $1,758.02, I just need help finding the steps to solve this. It might be easier using a financial calculator (BA IIPlus) too.

Answers

The interest rate is

So, the interest due at the end of first year

∴ Principal in 1st Year

Balance

.

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