Tom is going to borrow $20000 at an interest rate of 5.25% p.a. calculated quarterly. Tom will make end-of-month repayments for 2 years. The effective rate for this loan is Reff 0.0043559977 What will be Tom's monthly payment amount? Give your answer to the nearest penny.

Tom is going to borrow $20000 at an interest rate of 5.25% p.a. calculated quarterly. Tom will make end-of-month repayments for 2 years. The effective rate for this loan is Reff 0.0043559977 What will be Tom's monthly payment amount? Give your answer to the nearest penny.

Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)

7th Edition

ISBN:9780357033609

Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Chapter7: Using Consumer Loans

Section: Chapter Questions

Problem 9FPE: Calculating and comparing add-on and simple interest loans. Eli Nelson is borrowing 10,000 for five...

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Concept explainers

Cost of Credit

The cost of credit is an extra amount that the borrower has to pay besides the loan amount. These credit charges may vary from loan to loan. The cost of credit includes interest charges, maintenance charges, and arrangement charges. Some of the costs are mandatorily collected by the lender based on the loan amount and tenure of the loan. The cost of credit is also called finance charges of the credit.

Question

Tom is going to borrow $20000 at an interest
rate of 5.25% p.a. calculated quarterly. Tom will
make end-of-month repayments for 2 years.
The effective rate for this loan is Reff =
0.0043559977
What will be Tom's monthly payment amount?
Give your answer to the nearest penny.

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