LOAN AMORTIZATION AND EAR

You want to buy a car, and a local bank will lend you $40,000. The loan will be fully amortized over 5 years (60 months), and the nominal interest rate will be 9% with interest paid monthly.

What will be the monthly loan payment? Do not round intermediate steps. Round your answer to the nearest cent.

$

What will be the loan's EAR? Do not round intermediate steps. Round your answer to two decimal places.

%

How much principal will be repaid in the second year on a 20-year, $60,000 mortgage requiring annual payments and a 10% annual interest rate?

a. $1,725.70

b. $7,047.58

c. $1,047.58

d. $1,152.34

e. $5,895.24

EFFECTIVE INTEREST RATE

You borrow $320,000; the annual loan payments are $36,807.87 for 30 years. What interest rate are you being charged? Round your answer to two decimal places.

%

If you would like to accumulate $7,500 over the next 5 years, how much must you deposit each six months, starting six months from now, given a 6% interest rate and semiannual compounding?

a. $ 879.23

b. $ 654.23

c. $1,330.47

d. $ 569.00

e. $ 732.67