Question
Louisa borrowed to buy a piano for her business. Luisa's music, paying $135 at the end of each month for 5 years. The bank charges
Louisa borrowed to buy a piano for her business. Luisa's music, paying $135 at the end of each month for 5 years. The bank charges interest on the loan at 8.8% compounded monthly
a) What is the cash price of the piano?
b) How much is the cost of financing?
c) By how much would the cash price change if the bank charged interest at 7.7% compounded monthly?
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An Introduction to the Mathematics of Financial Derivatives
Authors: Ali Hirsa, Salih N. Neftci
3rd edition
012384682X, 978-0123846822
