Lowlife Company defaulted on a $190,000 loan that was due onDecember 31, 2018. The...

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Accounting

Lowlife Company defaulted on a $190,000 loan that was due onDecember 31, 2018. The bank has agreed to allow Lowlife to repaythe $190,000 by making a series of equal annual payments beginningon December 31, 2019. (FV of $1, PV of $1, FVA of $1, PVA of $1,FVAD of $1 and PVAD of $1) (Use appropriate factor(s) fromthe tables provided.)

Required:

1. Calculate the required annual payment if thebank’s interest rate is 10% and four payments are to be made.
2. Calculate the required annual payment if thebank’s interest rate is 8% and five payments are to be made.
3. If the bank’s interest rate is 10%, how manyannual payments of $27,885 would be required to repay thedebt?
4. If three payments of $69,117 are to be made,what interest rate is the bank charging Lowlife?

Answer & Explanation Solved by verified expert

4.0 Ratings (635 Votes)

Formula sheetABCDEFGHIJ23145Calculation of Annual Payment67Annual payment can be calculated usingPMTRATENPERPVFVTYPE function in Excel as follows89Given the following data10Amount to be Repaid19000011Duration4Years12Interest rate011314Annual Payment can be calculated as below15RATED1216NPER No of MonthsD1117PV Loan AmountD1018FV019TYPE020Annual See Answer

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In: AccountingLowlife Company defaulted on a $190,000 loan that was due onDecember 31, 2018. The bank...Lowlife Company defaulted on a $190,000 loan that was due onDecember 31, 2018. The bank has agreed to allow Lowlife to repaythe $190,000 by making a series of equal annual payments beginningon December 31, 2019. (FV of $1, PV of $1, FVA of $1, PVA of $1,FVAD of $1 and PVAD of $1) (Use appropriate factor(s) fromthe tables provided.)Required:1. Calculate the required annual payment if thebank’s interest rate is 10% and four payments are to be made.2. Calculate the required annual payment if thebank’s interest rate is 8% and five payments are to be made.3. If the bank’s interest rate is 10%, how manyannual payments of $27,885 would be required to repay thedebt?4. If three payments of $69,117 are to be made,what interest rate is the bank charging Lowlife?