If you borrowed S 15,000 to be repaid in 20 equal quarterly payments and after your 10th payment you decided to pay the remainder of the loan in a single payment. What will be the amount of the remaining balance with the interest being 12% compounded monthly ?

If you borrowed S 15,000 to be repaid in 20 equal quarterly payments and after your 10th payment you decided to pay the remainder of the loan in a single payment. What will be the amount of the remaining balance with the interest being 12% compounded monthly ?

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter4: Time Value Of Money

Section4.17: Amortized Loans

Problem 1ST

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Concept explainers

Loanable Funds Theory

The loanable funds theory is a neoclassical theory that determines the interest rate where the demand for loanable investments and supply of loanable funds intersect. To determine the interest rate, this theory employs linear regression and a demand curve. At the equilibrium point, demand for borrowings and demand for the issuance of borrowing funds are inextricably linked. This point of equilibrium should equalize demand and the supply of money available for borrowing.

Question

D7)

3) If you borrowed $ 15,000 to be repaid in 20 equal quarterly payments and after your
10th payment you decided to pay the remainder of the loan in a single payment. What
will be the amount of the remaining balance with the interest being 12% compounded
monthly ?

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