Question

You have a 10 year loan for $50,000 and you make annual payments. The interest rate...

You have a 10 year loan for $50,000 and you make annual payments. The interest rate is 6% annual compounded quarterly.

     a) What are your annual payments?

     b) If the inflation rate is 3.2% annual compounded monthly, what is the purchasing power of your final payment in year 2 dollars?

     c) What are the equal annual payments in year 2 constant dollars with the above inflation rate?

     d) What is the total interest paid in year 2 constant dollars with the above inflation rate?

Homework Answers

Answer #1

Int rate 3.2% annual compounding monthly int paid in year 2 =1484

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