Question
You are offered an add-on loan for $4,500 at 18% for 5 years. What is the monthly payment? What is the amount of interest? What
- You are offered an add-on loan for $4,500 at 18% for 5 years.
What is the monthly payment?
What is the amount of interest?
What is the true interest rate cost of this loan?
2.If you could pay the same loan above at a compound rate:
What would the monthly payment be?
What would the amount of interest be?
*Create monthly payment schedule for each loan above using Excel.
Suppose that you are only allowed to make a balloon payment to the principal of the compound interest loan. You have $1,000 to put down at the beginning of year three. How many payments will you save?
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Essentials of Investments
Authors: Zvi Bodie, Alex Kane, Alan J. Marcus
10th edition
77835425, 978-0077835422
