Loan amortization and ear

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Reference no: EM13974554

LOAN AMORTIZATION AND EAR You want to buy a car, and a local bank will lend you $20,000. The loan will be fully amortized over 5 years (60 months), and the nominal interest rate will be 12% with interest paid monthly. What will be the monthly loan payment? What will be the loan’s EAR?

PRESENT AND FUTURE VALUES FOR DIFFERENT INTEREST RATES Find the following values. Compounding/discounting occurs annually.

An initial $500 compounded for 10 years at 6%.

An initial $500 compounded for 10 years at 12%

The present value of $500 due in 10 years at 6%

The present value of $1,552.90 due in 10 years at 12% and at 6%

Define present value and illustrate it using a time line with data from part d. How are present values affected by interest rates?

Reference no: EM13974554

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