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Suppose you borrowed $1,000. The interest rate is 5% per year. You are supposed to payoff the principal in equal semi-annual payments in five years
Suppose you borrowed $1,000. The interest rate is 5% per year.
You are supposed to payoff the principal in equal semi-annual payments in five years along with the interest rate payments. What are your semi-annual payments?
Now assume that you are supposed to make equal semi-annual payments in the form of annuities for the five years.
Draw the amortization table for the two options.
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