Annual interest

A loan of 10 000 euro is to be repaid in annual payments over 10 years. Assuming a fixed 10% annual interest rate compounded annually, calculate:

(a) the amount of each annual repayment
(b) the total interest paid.

Correct result:

a =  1627.45 Eur
i =  6274.54 Eur

Solution:

l=10000 eur r=10%=10100=0.1 n=10   a=l r (1+r)n(1+r)n1=10000 0.1 (1+0.1)10(1+0.1)101=1627.45 Eur=1.6103 Eur
i=n al=10 1627.453910000=6274.54 Eur=6.3103 Eur



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