A debt of $5600 is repaid in equal monthly instalments over three years. Interest is 7.3% compounded quarterly. (a) What is the size of the monthly payments? (b) What will be the total cost of borrowing? c) What is the outstanding balance after one year?

A debt of $5600 is repaid in equal monthly instalments over three years. Interest is 7.3% compounded quarterly. (a) What is the size of the monthly payments? (b) What will be the total cost of borrowing? c) What is the outstanding balance after one year?

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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Question

A debt of $5600 is repaid in equal monthly instalments over three
years. Interest is 7.3% compounded quarterly.
(a) What is the size of the monthly payments?
(b) What will be the total cost of borrowing?
(c) What is the outstanding balance after one year?
(d) How much of the 30th payment is interest?
(e) Construct a partial amortization schedule showing details of
the first three payments, the last three payments, and totals.

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