Annuity of Business Mathematics
Asked Feb 27, 2011, 08:13 AM
Ryan wishes to borrow 10000.Meade and Halliday offer to lend the money with following term:
Meade would be repaid with 10 equal annual payment made at the end of each year at 8% interest effective annually.
Halliday charges an annual effective interest rate of I with Ryan accumulating the amount necessary to repay the loan by means of 10 annual deposits at the end of each year into sinking fund earning 7% interest effective annually.
The total payment(principal and interest) is same for Maede and Halliday.