Mathematics of Finance

Question

A young man borrowed 150,000 at 12% interest and paid 20,000 per year for the last 4 years. How much will be his final payment at the end of the fifth year?

Answer 1

Hi Marie,

Using a simple amortization table in Excel, it shows that the remaining balance at the end of five years will be $157,294.

Of course, all this assumes the $150,000 was borrowed at the beginning of the year and interest was accrued at the end of the year as well as the $20,000 annual payment.