Answer:
Annual loan payment = $13,146.78
Explanation:
Loan Amortization: A loan repayment method structured such that a series of equal periodic installments will be paid for certain number of periods to offset both the loan principal amount and the accrued interest.
The monthly equal installment is calculated as follows:
Monthly equal installment= Loan amount/Monthly annuity factor
Monthly annuity factor
=( 1-(1+r)^(-n))/r
r- Monthly interest rate (r)
= 7.25%/12= 0.604
%
n- Number of months ( n) in 5 years
= 12* 6 = 60
Annuity factor
= ( 1- (1.00604)^(-60)/0.00604= 50.2024
Monthly installment= 55,000 /50.2024 = $1,095.56
Monthly installment = $1,095.56
Annual loan payment = monthly installment × 12
Annual loan payment =$1,095.56 ×12=13,146.78
Annual loan payment = $13,146.78
