Martha has decided to gift her parents with a small business. She conducted some market research and settled on opening a general store for them to run. To facilitate this, she plans to get a loan of Ksh. 600,000 from a bank to be paid in four equal yearly installments. The loan attracts an interest rate of 8% per annum. Required: 1: What is the annual payment that Martha has to make every year? 2: Prepare the loan amortization schedule for Martha for the four years. 3: Assuming that Martha was required to make monthly payments for a period of 3 years what would be the monthly payment (annuity)?

Martha has decided to gift her parents with a small business. She conducted some market research and settled on opening a general store for them to run. To facilitate this, she plans to get a loan of Ksh. 600,000 from a bank to be paid in four equal yearly installments. The loan attracts an interest rate of 8% per annum. Required: 1: What is the annual payment that Martha has to make every year? 2: Prepare the loan amortization schedule for Martha for the four years. 3: Assuming that Martha was required to make monthly payments for a period of 3 years what would be the monthly payment (annuity)?

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter4: Time Value Of Money

Section: Chapter Questions

Problem 25PROB

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