Correct; payment is semiannual, and 4% is used to calculate the interest at each payment.

Balance MUST be less than 100,000, else loan would never get repaid; think about it!

Required semiannual payment: 100000(.04) / (1 - 1/1.04^40) = 5052.3489....so $5,052.35

Here's what the loan "looks like" as it gets repaid:

Code:

N PAYMENT INTEREST BALANCE
0 100,000.00
1 -5,052.35 4,000.00 98,947.65
2 -5,052.35 3,957.91 96,714.21
.....
20 -5,052.35 2,835.21 68,663.07 **********
.....
39 -5,052.35 381.17 4,858.03
40 -5,052.35 194.32 .00

********** this is amount required to pay off loan after 20 payments; OK?

This amount can be calculated by formula:

future value of 100000.00 over 20 periods less future value of 20 payments of 5052.35; here:

100000(1.04^20) = 219112.31 [1]

5052.35(1.04^20 - 1) / .04 = 150449.24 [2]

[1] - [2] = 68663.07

So, you all ok now?