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    Calculating Annual Payment for a Loan Including Interest

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    Assuming payments are made at the end of each year, what is the annual payment required to retire a $50,000 loan with a term of 5 years and an interest rate of 10%; how much of this payment represents interest at the end of year 1?

    a: $8,189.87; $5,000

    b: $13,189.87; $5,000

    c; $13,189.87; $8,189.87

    d: $13,189.87; $13,189.87

    e: $5,000; $5,000

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    Solution Preview

    If there was no interest, you would simply pay $10,000 per year for 5 years to pay back the ...

    Solution Summary

    This solution shows how to calculate the annual payment for a loan and how much of the payment is interest.