Answer:
Annual payment= $3,901.78
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 instalment is computed as follows:
Monthly installment= Loan amount/annuity factor
Loan amount; = 23,000
Annuity factor = (1 - (1+r)^(-n))/r
r -monthly rate of interest, n- number of months
r- 8%/12 = % = 0.6667
, n = 8 × 12 = 96
Annuity factor = ( 1- (1+0.6667)^(-96))/0.6667
= 70.7370
Monthly installment = Loan amount /annuity factor
= 23,000/70.7370 = 325.15
Annual payment = 12× 325.15 = $3901.78
Annual payment= $3,901.78
