Question
You are scheduled to make your first payment on your student loan in exactly one month. The$80,000 loan has a maturity of 120 months and
You are scheduled to make your first payment on your student loan in exactly one month. The$80,000 loan has a maturity of 120 months and a contractual rate of 8.2%. The current risk-free ratein the economy is 1.4%. The institution holding the loan contract makes you the following offer: ifyou make all payments on time for the first two years, the interest rate in your contract will repriceto 4% for the remaining eight years. The offer would cost you an $800 fee, payable at the time ofthe repricing. To the nearest dollar, calculate the NPV (at the time the fee is paid) of accepting theoffer.
The answer is 11,991 but i really dont know how I can get this. Also, please include solutions for finance calculator like 8.2/12 [i] 96[n].....pmt .
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