W5P1
Xurdaben
W5P1.xlsxScenario 1
| Pay all of the interest (8% per year) and principal in one lump sum at the end of 5 years | ||
| Amount | $ 300,000 | |
| Period (years) | 5 | |
| Interes rate | 8% | |
| FV | = PV × (1 + r)n | |
| Answer- | Total Payment | |
| Interest Paid | ||
| Refer to the Solved Example 6 on Page 84 of your text. |
Scenario 2
| Pay interest at the rate of 8% per year for 4 years and then a final payment of interest and principal at the end of the 5th year; | |
| Amount | $ 300,000 |
| Period (years) | 5 |
| Interes rate | 8% |
| Answer | |
| Annual Interest Payment- | |
| Year 5 Payment - | |
| Total Payment- | |
| Interest Paid- | |
| Refer to the Solved Example 6 on Page 84 of your text. |
Comparison
| Total Payment | Interest paid | |
| Scenario #1 | $ - 0 | $ - 0 |
| Scenario #2 | $ - 0 | $ - 0 |
| Which of the scenarios is the best option? | ||
| Answer: | ||
| Refer to the Solved Example 6 on Page 84 of your text. |
