A loan can be settled by monthly payments of $350 in four years at 5.5% compounded monthly. If the lender sells the loan contract after two years, calculate the selling price if the new buyer's rate of return is: 1.5.5% compounded monthly; 2.5.0% compounded monthly. 3. Explain the impact on the selling price of a loan contract if the interest rate on the contract increases.

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
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A loan can be settled by monthly payments of $350 in four years at 5.5% compounded monthly. If the lender
sells the loan contract after two years, calculate the selling price if the new buyer's rate of return is:
1.5.5% compounded monthly;
2.5.0% compounded monthly.
3. Explain the impact on the selling price of a loan contract if the interest rate on the contract increases.
Transcribed Image Text:Question- A loan can be settled by monthly payments of $350 in four years at 5.5% compounded monthly. If the lender sells the loan contract after two years, calculate the selling price if the new buyer's rate of return is: 1.5.5% compounded monthly; 2.5.0% compounded monthly. 3. Explain the impact on the selling price of a loan contract if the interest rate on the contract increases.
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