Find the equivalent value of the payment of this loan

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Problem - The purchase of a car requires a $25,000 loan to be paid in monthly installments for 5 years at an interest rate of 12% APR (nominal annual rate compounded monthly). This rate determines the actual/then-current loan payments.

(a) If the nominal annual inflation rate is 6% compounded monthly, find the equivalent value of the 20th payment of this loan measured in Year-0 dollars.

(b) Using the short-hand notation introduced in class, set up an expression to that can be used to find an equivalent repayment schedule consisting of a uniform series of 60 equal monthly payments measured in Year-0 dollars.

Reference no: EM132961646

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