A bank offers to lend you $1,000 if you sign a note to pay K1,610.50 at the end of 5 years. What rate of interest is the bank charging you? b) Basket Wonders (BW) has a $1,000 Cash Deposit (CD) at the bank. The interest rate is 6% compounded quarterly for 1 year. What is the Effective Annual Interest Rate (EAR)? c) Prepare an amortization schedule for a K1, 000 loan to be paid in 3 equal installments at the end of each of the next 3 years. Interest is charged at a rate of 6% per annum.
A bank offers to lend you $1,000 if you sign a note to pay K1,610.50 at the end of 5 years. What rate of interest is the bank charging you? b) Basket Wonders (BW) has a $1,000 Cash Deposit (CD) at the bank. The interest rate is 6% compounded quarterly for 1 year. What is the Effective Annual Interest Rate (EAR)? c) Prepare an amortization schedule for a K1, 000 loan to be paid in 3 equal installments at the end of each of the next 3 years. Interest is charged at a rate of 6% per annum.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
A bank offers to lend you $1,000 if you sign a note to pay K1,610.50 at the end
of 5 years. What rate of interest is the bank charging you?
b) Basket Wonders (BW) has a $1,000 Cash Deposit (CD) at the bank. The interest
rate is 6% compounded quarterly for 1 year. What is the Effective Annual Interest
Rate (EAR)?
- c) Prepare an amortization schedule for a K1, 000 loan to be paid in 3 equal
installments at the end of each of the next 3 years. Interest is charged at a rate of
6% per annum.
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