Question

You borrow $400 promising to repay in 4 semi-annual installments at 6% (APR) (compounded monthly), how much are your payments?

Answer 1

$ 101.25

Step-1:Calculation of equivalent semi annual interest rate
(1+i)^n	=	(1+i)^n		Where,
(1+0.005)^6	=	(1+i)^1		Monthly Interest rate	=	6%/12	=	0.005
1.030378	=	1+i
0.030378	=	i
So,
Semi annual equivalent interest rate	=	0.030378
Step-2:Calculation of semi annual payment
Semi annual payment	=-pmt(rate,nper,pv,fv)	Where,
	$ 101.25			rate	=	0.005
				nper	=	4
				pv	=	$ 400.00
				fv	=	0