4.21 Balloon Payments On 1 September 2019, Susan Chao bought a motorcycle for £15,000. She paid £1,000 down and financed the balance with a 5-year loan at a stated annual interest rate of 9.6 per cent, compounded monthly. She started the monthly payments exactly 1 month after the purchase (i.e., 1 October 2019). Two years later, at the end of October 2021, Susan got a new job and decided to pay off the loan. If the bank charges her a 1 per cent prepayment penalty based on the loan Page 90 balance, how much must she pay the bank on 1 November 2021?
4.21 Balloon Payments On 1 September 2019, Susan Chao bought a motorcycle for £15,000. She paid £1,000 down and financed the balance with a 5-year loan at a stated annual interest rate of 9.6 per cent, compounded monthly. She started the monthly payments exactly 1 month after the purchase (i.e., 1 October 2019). Two years later, at the end of October 2021, Susan got a new job and decided to pay off the loan. If the bank charges her a 1 per cent prepayment penalty based on the loan Page 90 balance, how much must she pay the bank on 1 November 2021?
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
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Transcribed Image Text:4.21
Balloon Payments On 1 September 2019, Susan Chao bought a motorcycle for £15,000. She paid £1,000 down and financed
the balance with a 5-year loan at a stated annual interest rate of 9.6 per cent, compounded monthly. She started the monthly
payments exactly 1 month after the purchase (i.e., 1 October 2019). Two years later, at the end of October 2021, Susan got a
new job and decided to pay off the loan. If the bank charges her a 1 per cent prepayment penalty based on the loan Page 90
balance, how much must she pay the bank on 1 November 2021?
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