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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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