Henry needs a loan of $30,000 to start his business and convinces his brother to let him borrow the amount fro

Question

Henry needs a loan of $30,000 to start his business and convinces his brother to let him borrow the amount from him at 6%, compounded annually. What payment must Henry make at the end of each year if he is to repay the loan in 5 years?

a. $7,800
b. $6,719
c. $6,500
d. $7,122

Answer 1

Payment Interest Principle Balance
$30,000.00
$17,122.00 $1,800.00 $5,322.00 $24,678.00
$27,122.00 $1,480.68 $5,641.32 $19,036.68
$37,122.00 $1,142.20 $5,979.80 $13,056.88
$47,122.00 $783.41 $6,338.59 $6,718.29
$57,122.00 $403.10 $6,718.90 $-0.61

I couldn't get the formatting to stay in the answer. $7,122 results in a ($0.61) balance at the end of 5 years.