I owe a bank the following sums of money in each of the next four
years (payable at year-end): $10000,8000,20000,and 15000. I and the
bank agree to convert the uneven payments stream into an ordinary
four-year annuity. If the interest rate is 10%, what is the equal
annual payment I have to make?

Hi holla,


$ 10,000 - 2003
   8,000 - 2004
  20,000 - 2005
  15,000 - 2006

$ 53,000 for 4 yr. @ 10%


$16,130.64 = four equal payments
$64,522.38 = total paid
$11.522.38 = interest paid


Thank you for using Google Answers - if I've misunderstood the
problem, please request a clarification before rating my answer.

hummer

From my reading of the question, I had assumed that the four sums were
to be combined into one sum, to be paid off in four years. I am not
certain, however.

Thanks supermacman,

To clarify, I combined the four sums into one sum (53,000), calculated
the 10% per year, and came up with four equal payments of 16,130.64 ,
one payment per year.

I think that is what you are saying too.

hummer

I missed that line. You are right. Thanks, hummer.