Answer:
b.$4156.43
Explanation:
Assuming Payment are made at the end of each year:
Following formula will be used to calculate the annual loan payment.
P = a/{[(1+r)^n]-1}/[r(1+r)^n]
whereas
P= Annual Payment
a = Loan amount
r = rate of interest
n = number of years
P = a/{[(1+r)^n]-1}/[r(1+r)^n]
P = a x [tex]\frac{[r(1+r)^n]}{(1+r)^n]-1}[/tex]
P = $25,000 x [tex]\frac{[0.105(1+0.105)^10]}{(1+0.105)^10]-1}[/tex]
P = $4,156.43
So the correct answer is b.$4156.43
