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2. Larry makes Linda a loan with zero payments and negative amortization at a semi annual compounding ( j 2) rate of 3%. While no
2. Larry makes Linda a loan with zero payments and negative amortization at a semi annual compounding (j2) rate of 3%. While no payments are due until the end of the term after 20 years, interest accrues monthly. The initial loan amount is $100,000.
(a) What will be the monthly interest rate (i12)?
(b) What will be the outstanding balance after 20 years?
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