If Bill agrees to pay the loan over the next 15 years in 15 equal end-of-year payments plus 8 percent compound interest on the unpaid balance, what will these equal payments be
the loan is for 120,000
Bill's yearly payments on his loan would be =$14,019.55 for 15 years @ 8% compounded annually.
This is the formula you use to calculate this:
PMT=PV. R.{[1 + R]^N/ [1 + R]^N - 1}, Where R=Interest rate per period, N=number of periods, PMT=periodic payment, PV=Present value.
PMT=PV. R.{[1 + R]^N/ [1 + R]^N - 1},
PMT=120,000 x .08{[1.08]^15 / [1.08]^15 - 1}
PMT=9,600 x {1.46037}
PMT=$14,019.55
