Suppose you have three personal loans outstanding to your friend Elizabeth. A payment of $1,000 is due today, a $500 payment is due one year from now, and a $250 payment is due two years from now. You would like to consolidate the three loans into one, with 36 equal monthly payments, beginning one month from today. Assume the agreed interest rate is 8% (effective annual rate) per year. a. What is the annual percentage rate you will be paying? b. How large will the new monthly payment be?
Suppose you have three personal loans outstanding to your friend Elizabeth. A payment of $1,000 is due today, a $500 payment is due one year from now, and a $250 payment is due two years from now. You would like to consolidate the three loans into one, with 36 equal monthly payments, beginning one month from today. Assume the agreed interest rate is 8% (effective annual rate) per year. a. What is the annual percentage rate you will be paying? b. How large will the new monthly payment be?
Chapter4: Time Value Of Money
Section4.17: Amortized Loans
Problem 1ST
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