Interest-only loan (regular interest payments each year and principal at maturity).Chuck P
Interest-only loan (regular interest payments each year and principal at maturity).Chuck Ponzi has talked an elderly woman into loaning him $10,000 for a new business venture. She has, however, successfully passed a finance class and requires Chuck to sign a binding contract on repayment of the $10,000 with an annual interest rate of 10 % over the next 10 years. Determine the cash flow to the woman under an interest-only loan, in which Ponzi will pay the annual interest expense each year and pay the principal back at the end of the contract.
A) What is the amount of payment that the woman will receive at the end of years 1 through 9 ?