Question
How much would have to be invested at the end of each year at 6% interest compounded annually to pay off a debt of $80,000 in 10 years?
Answers
MathMate
The formula for uniform partial payment P at an interest rate of r for n periods compounded at the end of each period and initial amount A is given by:
AR^n = P(R^n -1)/(R-1)
where R=1+r,
so
P=r*AR^n / (R^n-1)
Here
r=6% p.a.
n=10 years
A=$80,000
R=1+0.06=1.06
P=r*AR^n / (R^n-1)
=$10869.44
AR^n = P(R^n -1)/(R-1)
where R=1+r,
so
P=r*AR^n / (R^n-1)
Here
r=6% p.a.
n=10 years
A=$80,000
R=1+0.06=1.06
P=r*AR^n / (R^n-1)
=$10869.44