Lowlife Company defaulted on a 130000 loan that was due on D

Lowlife Company defaulted on a $130,000 loan that was due on December 31, 2018. The bank has agreed to allow Lowlife to repay the $130,000 by making a series of equal annual payments beginning on December 31, 2019. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)

Required:

1. Calculate the required annual payment if the bank’s interest rate is 10% and four payments are to be made.
2. Calculate the required annual payment if the bank’s interest rate is 8% and five payments are to be made.
3. If the bank’s interest rate is 10%, how many annual payments of $34,294 would be required to repay the debt?
4. If three payments of $51,357 are to be made, what interest rate is the bank charging Lowlife?
  
I only need requirement 3 and 4

for requirement 3 I need:

N=

Annual Installment

Requirement 4 I need:

i =

Solution

Answer 3.

Loan Balance = $130,000
Interest Rate = 10%
Annual Payment = $34,294

$34,294 * PVA of $1 (10%, N) = $130,000
PVA of $1 (10%, N) = 3.7908
Using present value of annuity table, N = 5

So, Number of Payments = 5

Answer 4.

Loan Balance = $130,000
Annual Payment = $51,357
Number of Payments = 3

$51,357 * PVA of $1 (I%, 3) = $130,000
PVA of $1 (I%, 3) = 2.5313
Using present value of annuity table, I = 9%

So, Annual Interest Rate = 9.00%