A car buyer takes out a 25,000 e loan to purchase the car. Suppose that the annual interest rate is 3%. Assume that interest is compounded continuously and that payments are also made continuously. (i) What monthly payment is required to pay off the loan in 10 years? (ii) What is the total interest paid during the term of the mortgage?
A car buyer takes out a 25,000 e loan to purchase the car. Suppose that the annual interest rate is 3%. Assume that interest is compounded continuously and that payments are also made continuously. (i) What monthly payment is required to pay off the loan in 10 years? (ii) What is the total interest paid during the term of the mortgage?
Chapter4: Time Value Of Money
Section4.17: Amortized Loans
Problem 1ST
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A car buyer takes out a 25,000 e loan to purchase the car. Suppose that the annual interest rate is 3%. Assume that interest is compounded continuously and that payments are also made continuously.
(i) What monthly payment is required to pay off the loan in 10 years?
(ii) What is the total interest paid during the term of the mortgage?
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