Payments needed? Zach Taylor is settling a $27,000 loan due today by making 6 eq

Question

Payments needed?

Zach Taylor is settling a $27,000 loan due today by making 6 equal annual payments of $6018.83.

What payments must Zach Taylor make to settle the loan at the interest rate of 9%, but with the 6 payments beginning on the day the loan is signed?(Round answer to 2 decimal places, e.g. 2,250.25. Hint: Use tables in text.)

Payments $ Payments needed? Zach Taylor is settling a $27,000 loan due today by making 6 equal annual payments of $6018.83. What payments must Zach Taylor make to settle the loan at the interest rate of 9%, but with the 6 payments beginning on the day the loan is signed?

Explanation / Answer

You need to find the present value of annuity due.

n=6, i=9%, PV of annuity due of 1: 4.88965

So, 27,000/4.88965 = $5521.87 is your annual payment.

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