A 10 year loan of 2,000 is repaid with payments the end of each year. There are 2 options: a. Equal annual payments at an annual effective rate of 8.07%; b. Installment of 200 each year plus interest on the outstanding balanc at an effective rate of i %. The sum of the payments under each option is the same. What is i?

10

You will be in graduate school for the next two years. You borrowed some money from the bank for your graduate education, which the bank has accepted to be paid after you graduate from school in three years. The bank has accepted to the following payment plan; from the beginning of Year 3 (25th month) to end of year 5 (60th month), pay $950 per month 25 and increase payment by 2% every month thereafter. How much money should you put aside each month (equal amount) for the first 24 months (during graduate school) such that you can pay the loan back after graduation? Use an APR of 12%, compounded monthly. Question 7 Part A.

The monthly payments on a 10-year loan of $35,000 at 6.1% interest are $390.33. (a) What is the total amount paid over the 10 years?$ (b) What is the total amount of interest paid?