A food processing plant in Poland takes out a loan of 1 million Polish Zloty (PLN) subject to interest at 6%. What must the annual payment be in order to pay the loan back in exactly 10 years (to the nearest 1 PLN)?

Question

Quizplus · Accepted Answer

The annual payment can be calculated using the formula for an annuity, which is: Payment = P * [r(1 + r)^n] / [(1 + r)^n - 1], where P is the principal amount (1,000,000 PLN), r is the annual interest rate divided by the number of periods per year (0.06), and n is the total number of payments (10). Plugging these values into the formula gives an annual payment of approximately 149,029 PLN, rounding to the nearest zloty.

A Food Processing Plant in Poland Takes Out a Loan