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
Related questions
Question

Transcribed Image Text:1. On September 1, 1998, Susan Chao bought a motorcycle for $10,000. She paid $1,000 down
and financed the balance with a five-year loan at an APR of 9.6%, compounded monthly. She
started the monthly payment exactly one month after the purchase, i.e., October, 1998. In
the middle of October, 2000, she got a new job and decided to pay off the loan. If the bank
charges her 1% prepayment penalty based on the loan balance, how much should she pay the
bank on November 1, 2000?
Answer.
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