Example 5.1 A loan is being repaid with 10 payments of $2000 followed by 10 payments of $1000 at the end of each half-year. If the nominal rate of interest convertible semiannually is 10%, find the outstanding loan balance immediately after five payments have been made by: (1) The prospective method (****). (2) The retrospective method (@). t=0 t=1/2 t=2/2 t=5/2 HHH 2000 2000 2000 t=10/2 t=11/2 t=12/2 ||| ++ 2000 1000 1000 t=20/2 + 1000

Example 5.1 A loan is being repaid with 10 payments of $2000 followed by 10 payments of $1000 at the end of each half-year. If the nominal rate of interest convertible semiannually is 10%, find the outstanding loan balance immediately after five payments have been made by: (1) The prospective method (****). (2) The retrospective method (@). t=0 t=1/2 t=2/2 t=5/2 HHH 2000 2000 2000 t=10/2 t=11/2 t=12/2 ||| ++ 2000 1000 1000 t=20/2 + 1000

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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A. Given the data in the table and the information below, please answer the following parts. Show all working and formulas used. Maturity (T) Spot Rate (%) r(1) r(2) r(3) r(4) r(5) r(6) 0.05 0.28 0.12 0.07 The forward råte for a 3-year loan beginning in 2 years is 0.08%. The forward rate for a 2-year loan starting in 3 years is -0.16%. 1) Please calculate the 3-year spot rate. 2) Please calculate the 2-year spot rate.
The principal P is borrowed at simple interest rate r for a period of time t. Find the loan's future value, A, or the total amount due at time t. P=$4000, r= 7.5%, t= 9 months The future value is $ (Simplify your answer. Type an integer or a decimal.)
Use the formula A = P(1 + rt)to calculate the maturity value of the simple interest loan. (Round your answer to two decimal places.)P = $18,000, r = 8.7%, t = 4 months
1. Find the amount (in $) of interest and the maturity value of the loans. Use the formula MV = P + I to find the maturity value. (Round your answers to two decimal places.) Principal Rate (%) Time Interest Maturity Value $145,000 14 1 2 5 months $ $ 2.Use MV = P(1 + RT) to find the maturity value (in $) of the loan. (Round your answer to two decimal places.) Principal Rate (%) Time Maturity Value $5,600 7.4 14 months $
4.Find the amount (in $) of interest and the maturity value of the loans. Use the formula MV = P + I to find the maturity value. (Round your answers to two decimal places.) Principal Rate (%) Time Interest Maturity Value $145,000 15 1 2 5 months $ $
1. Use MV = P(1 + RT) to find the maturity value (in $) of the loan. (Round your answer to two decimal places.) Principal Rate (%) Time Maturity Value $5,600 7.4 14 months 2Calculate the present value (principal) and the compound interest (in $). Use Table 11-2. Round your answers to the nearest cent. CompoundAmount Term ofInvestment NominalRate (%) InterestCompounded PresentValue CompoundInterest $6,000 12 years 6 semiannually $ $
5. Use MV = P(1 + RT) to find the maturity value (in $) of the loan. Principal Rate (%) Time Maturity Value $15,660 11 1 2 42 months $
The principal P is borrowed at simple interest rate r for a period of time t. Find the loan's future value, A, or the total amount due at time t. Round answer to the nearest cent. P=$900, r=6%, t=2 months
The principal P is borrowed at a simple interest rate R for a period of time T. Find the loans Future Value A or total amount due at the time. P= 39000 R= 6.5% t= 3 years
Q1: If a loan of 12.5 million is made for a period of 33 days at a rate of 8,25% per annum, what is the total amount repayable at the end of the period? Assume 365/365 days in the year. 12,593,236.30 12,583,236.30 10,573,287.67 10,853,25.52 which one is correct please help.
24. Which of the following is the base unit of time over which an interest rate is calculated? Interest Period Discount Rate Compounding Period Compounding Rate 25. Simple interest of P1,235 is owed on a loan of P9,500 after four years and four months. What is the annual interest rate? 2% 2.5% 3.5% 3%
= Consider two loans with one-year maturities and identical face values: a(n) 8.4% loan with a 1.03% loan origination fee and a(n) 8.4% loan with a 4.5% (no-interest) compensating balance requirement. Which loan would have the higher effective annual rate? Why? The EAR in the first case is%. (Round to one decimal place.) er cl

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