Answer:
$130,000 per year
Explanation:
To establish how much is paid in annual installments, we firstly have to calculate the simple intereest on the amount borrowed.
Simple interest = Principal x rate x time
100%
where:
principal = $300,000
rate = 12%
time = 3 years
we have,
SI = $300,000 x 12% x 3yrs
100%
SI = $90, 000
This means that for the period of 3 years, the interest on the $300,000 is $90,000.
The total amount to be repaid is $300,000 + $90,000 = $390,000.
Since the payment is for over a period of 3 years, the amount payable every year is $390,000
3
= $130,000 per annum.
Cheers.
