A loan of $126,500,000 is to be repaid by annual payments for 25 years. The payments will form a constant growth annuity with each payment being 20% larger than the previous one. The interest rate charged on the loan is 11% compounded annually. What is the size of the first payment?

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The first payment is $1,890,589. This is because the present value of the annuity is $126,500,000, and the interest rate is 11%. The first payment is then calculated as follows:PV = PMT * [1 - (1 + r)^-n] / r$126,500,000 = PMT * [1 - (1 + 0.11)^-25] / 0.11PMT = $1,890,589

A Loan of $126,500,000 Is to Be Repaid by Annual