Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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A loan of $3,000 for a new, high-end laptop computer is to be repaid in 15 end-of-month payments (starting one month from now). The monthly payments are determined as shown follows.What nominal and effective interest rates per year are actually being paid? Hint: Draw a cash-flow diagram from the perspective of the lender.
Transcribed Image Text:Loan principal
$3,000
Interest for 15 months at
1.5% per month
Loan application fee
675
150
Total
$3,825
Monthly payment = $3,825/15 = $255
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