Instructions

Draw Cash flow diagrams

Set up and solve problem in Excel

If a person borrows $8000 from her bank at an interest rate of 12% per year for three years, how much must she repay at that time (end of year 3) if:

a) the interest is compounded annually

b) the interest is compounded quarterly

Suppose the bank wanted three equal repayments at the end of each year; Assume interest is compounded annually. What would the repayment amounts be?