Constant dollars with the above inflation rate

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Reference no: EM131177107

You have a 10 year loan for $20,000 and you make annual payments. The interest rate is 5% annual compounded quarterly.

a) What are your annual payments?

b) If the inflation rate is 3% annual compounded monthly, what is the purchasing power of your final payment in year 0 dollars?

c) What are the equal annual payments in year 0 constant dollars with the above inflation rate?

d) What is the total interest paid in year 0 constant dollars with the above inflation rate?

Reference no: EM131177107

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