Saturday

November 29, 2014

November 29, 2014

Posted by **joe** on Friday, March 2, 2007 at 12:07am.

What is the interest rate? Zero?

If there is zero interest rate on the remaining balance, and if the first payment occurs at the end of the first year, then let the first payment be X and you have

X + 0.85 X + (0.85)^2 X + (0.85)^3 X = 10^6.

3.186625 X = 10^6

Solve that for X.

X = $313,811.63

next payment = $266,739.89

etc.

I made two careless errors in my previous answer. The total amount due is 10 million, not one million, and I forgot to ionclude the fifth payment.

The series of five payments ends with the one at the end of the fifth year, (0.85)^4*X

This makes a total payment of 3.70863125X equal to 10 million dollars. The first payment (X) should be X = 2,696,412

**Answer this Question**

**Related Questions**

Math 8th grade - A bank loans a customer $35,000 for a period of 8 yrs. The ...

Math - 4. Vanna has just financed the purchase of a home for $200 000. She ...

Finance - You have arranged for a loan on your new car that will require the ...

Maths - Firm has a $500,000 loan with 9% APR (compounded monthly) Loan is 5-yr ...

math - fixed installment loan of $13,500 with 60 months to pay back, monthly ...

Math - Shantle and Kwamie are planning to buy their first home. Although they ...

Math - 1.--Cody and Carolyn have a 20/7 balloon mortgage for $216,000 with a ...

engr. economics. - last year 92005-2006) you took out a a student loan for $12,...

Maths - Car loan interest rate is 7% loan payment $600 month 36 months left on ...

MATH - I am stuck in this question. "amortization payments" What amortization ...