What is the purchasing power of your final payment

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Reference no: EM132063935

You have a 10 year loan for $50,000 and you make annual payments. The interest rate is 6% annual compounded quarterly.

a) What are your annual payments?

b) If the inflation rate is 3.2% annual compounded monthly, what is the purchasing power of your final payment in year 2 dollars?

c) What are the equal annual payments in year 2 constant dollars with the above inflation rate?

d) What is the total interest paid in year 2 constant dollars with the above inflation rate?

Reference no: EM132063935

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