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How much of his first payment will be applied to interest

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1. Your uncle borrows $67,000 from the bank at 9 percent interest over the seven-year life of the loan. Use Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods.

a. What equal annual payments must be made to discharge the loan, plus pay the bank its required rate of interest? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)

Annual Payments_______

b. How much of his first payment will be applied to interest? To principal? (Do not round intermediate calculations. Round your final answers to 2 decimal places.)

First payment: Interest:_______

First payment: Principal_______

c. How much of his second payment will be applied to each? (Do not round intermediate calculations. Round your final answers to 2 decimal places.)

Second payment: Interest:_______

Second payment: Principal_______

Reference no: EM132347884

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