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August 22, 2014

August 22, 2014

Posted by **Gibbons** on Tuesday, June 22, 2010 at 2:43am.

(a) a debt of $15,000,000 with interest at 12% by 5 equal annual payments.

(b) a debt of $25,000,000 with interest at 12.5% compounded semi-annually by making 6 equal semi-annual payments.

- Mathematics -
**Reiny**, Tuesday, June 22, 2010 at 9:37ama)

First we have to find the payment, assume it is made at the end of each year

15000000= pay( 1 - 1.12^-5)/.12

pay = 4161145.98

Paym# interest principal Balance

1 1800000.00 2361145.98 12638854.02

2 1516662.48 2644483.45 9994370.52

3 1199324.46 2961821.52 7032549.01

4 843905.89 3317240.10 3715308.91

5 445837.07 3715308.91 0.00

not bad,

now do b) the same way

your payment equation will be

25000000 = pay( 1 - 1.0625^-6)/.0625

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