Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

You have an outstanding student loan with required payments of $600 per month for the next four years. The interest rate on the loan is

You have an outstanding student loan with required payments of $600 per month for the next four years. The interest rate on the loan is 8.50% APR (monthly). You are considering making an extra payment of $200 today (i.e., you will pay an extra $200 that you are not required to pay). If you are required to continue to make payments of $600 per month until the loan is paid off, what is the amount of your final payment? What effective rate of return (expressed as an APR with monthly compounding) have you earned on the $200? (Note: Be careful not to round any intermediate steps less than six decimal places.) If you are required to continue to make payments of $600 per month until the loan is paid off, what is the amount of your final payment?

1. The final payment is $ ____. (Round to the nearest cent.)

2. What effective rate of return (expressed as an APR with monthly compounding) have you earned on the $200?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

British And German Banking Strategies

Authors: S. Janssen

1st Edition

0230220487, 9780230220485

More Books

Students also viewed these Accounting questions