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18 August, 19:18

A company takes out a loan of 15,000,000 at an annual effective discount rate of 5.5%. you are given: i) the loan is to be repaid with n annual payments of 1,200,000 plus a drop payment one year after the nth payment. ii) the first payment is due three years after the loan is taken out. calculate the amount of the drop payment.

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  1. 18 August, 20:59
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    Answer: In the solutions, before they calculate the accumulated value of the payments, they accumulate the balance to time 2. I was wondering why they didn't go to to time 3, when the first payment is due.
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