A bank is negotiating a loan. The loan can either be paid off as a lump sum of $ 150 comma 000 at the end of six years, or as equal annual payments at the end of each of the next six years. If the interest rate on the loan is 8%, what annual payments should be made so that both forms of payment are equivalent

$27,000

Explanation:

8% interest rate on loan implies;

8/100 x $150,000 = $12,000

Making total payment at end of six years=

$12,000 + $150,000= $162,000

The annual payment now equals;

$162,000/6= $27,000

Note that the term annual payment means an equal amount of money to be paid yearly, which if summed up together would repay the loan amount when the repayment period ends

The financial planning has roughly the same structure. Even in their later stages of life, they need to prepare and pre-save for any major risks that may occur. Having a spouse and children may increase this risk as well. It’s important to set aside a little future college money for their kids, maybe an allowance, ect. Their savings when it comes to risk management should also be increased. Having to not only prepare for accidents with themselves, they now also have to prepare for any accidents including their children and spouse. Saving money for assets is also important, going in debt would put the whole family in danger so making sure house/apartment payments, car payments, taxes, ect., is needed.