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5 - 8 LOAN AMORTIZATION AND EAR You want to buy a car, and a local bank will lend you $ 2 0 , 0

5 - 8

LOAN AMORTIZATION AND EAR You want to buy a car, and a local bank will lend you $

20, 000 .

The loan will be fully amortized over

5

years

(60

months

),

and the nominal interest rate will be

12 %

with interest paid monthly. What will be the monthly loan payment? What will be the loan's EAR?

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