I purchased a piece of Land for $1,000,000. The seller and I agreed that I would not make any payments for a period of 10 years. We also agreed that after the first 10 years, I would make payments of $300,000 at the end of each year for 20 years. The question I have is this: How much is the purchase of this Land going to cost me over that 30-year period? I have a vague idea what the interest rate would be, but I would like somebody versed in these types of transactions to confirm it. Can anybody take a crack at it?. I would greatly appreciate it. Thanks for any help.
+118651 I purchased a piece of Land for $1,000,000. The seller and I agreed that I would not make any payments for a period of 10 years. We also agreed that after the first 10 years, I would make payments of $300,000 at the end of each year for 20 years. The question I have is this: How much is the purchase of this Land going to cost me over that 30-year period? I have a vague idea what the interest rate would be, but I would like somebody versed in these types of transactions to confirm it. Can anybody take a crack at it?. I would greatly appreciate it. Thanks for any help.
\(V_{10}=1000000*R^{10}\)
PV=1000000*R^10
C=300000
1+i=R
i=R-1
n=20
\(1000000*R^{10}=300000\left [ \frac{1-R^{-20}}{R-1} \right]\\ 10*R^{10}=3\left [ \frac{1-R^{-20}}{R-1} \right]\\ R\approx 1.099\qquad \qquad \qquad \text{From Wolfram|Alpha}\\ i=R-1\\ i\approx 0.099 \quad or \quad i\approx 9.9\%\)
https://www.wolframalpha.com/input/?i=10*R%5E10%3D3((1-R%5E-20)%2F(R-1))
