Ian loaned his friend $20,000 to start a new business. He considers this loan to be an investment, and therefore requires his friend to pay him an interest rate of 6% on the loan. He also expects his friend to pay back the loan over the next four years by making annual payments at the end of each year. Ian texted and asked that you help him calculate the annual payments that he should expect to receive so that he can recover his initial investment and earn the agreed-upon 6% on his investment. Calculate the annual payment and complete the following capital recovery schedule:

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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calculate the annual payment and complete the following capital recovery schedule. 

T Employers | Indee...
a Acima
Log In Cincinnati..
- CENGAGE MINDTAP
Ch 05: Assignment - Time Value of Money
Back to Assignment
Attempts
Keep the Highest/1
14. Loan amortization and capital recovery
Ian loaned his friend $20,000 to start a new business. He considers this loan to be an investment, and therefore requires his friend to pay him an
interest rate of 6% on the loan. He also expects his friend to pay back the loan over the next four years by making annual payments at the end of
each year. Ian texted and asked that you help him calculate the annual payments that he should expect to receive so that he can recover his initial
investment and earn the agreed-upon 6% on his investment.
Calculate the annual payment and complete the following capital recovery schedule:
Year
Beginning Amount
Payment
Interest Paid
Principal Paid
Ending Balance
ry
$20,000.00
$5,771.83
2
$5,771.83
$9,418.01 Y
$5,771.83
4
$4,900.61 V
S5,771.83
$0.00
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Transcribed Image Text:T Employers | Indee... a Acima Log In Cincinnati.. - CENGAGE MINDTAP Ch 05: Assignment - Time Value of Money Back to Assignment Attempts Keep the Highest/1 14. Loan amortization and capital recovery Ian loaned his friend $20,000 to start a new business. He considers this loan to be an investment, and therefore requires his friend to pay him an interest rate of 6% on the loan. He also expects his friend to pay back the loan over the next four years by making annual payments at the end of each year. Ian texted and asked that you help him calculate the annual payments that he should expect to receive so that he can recover his initial investment and earn the agreed-upon 6% on his investment. Calculate the annual payment and complete the following capital recovery schedule: Year Beginning Amount Payment Interest Paid Principal Paid Ending Balance ry $20,000.00 $5,771.83 2 $5,771.83 $9,418.01 Y $5,771.83 4 $4,900.61 V S5,771.83 $0.00 Grade It Now Save & Continue Continue without saving SEP 3.141593 3,
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