A loan of $3,000 for a new, high-end laptop computer is to be repaid in 15 end-of-month payments (starting one month from now). The monthly payments are determined as follows. Loan principal $3,000 675.00 Interest for 15 months at 1.5% per month 149.25 $3,824.25 Loan application fee Total Monthly payment = $3,824.25/15= $254.95 What nominal and effective interest rates per year are actually being paid? Hint: Draw a cash-flow diagram from the perspective of the lender. O C. $3,000 0 $3,000 0 1 1 2 3 2 3 $254.95. 14 15 $254.95.. 15 16 Q a Q O D. $3,000 $3,000 1 1 2 2 3 3 $254.95. 14 15 $254.95. 15 16 Q Q
A loan of $3,000 for a new, high-end laptop computer is to be repaid in 15 end-of-month payments (starting one month from now). The monthly payments are determined as follows. Loan principal $3,000 675.00 Interest for 15 months at 1.5% per month 149.25 $3,824.25 Loan application fee Total Monthly payment = $3,824.25/15= $254.95 What nominal and effective interest rates per year are actually being paid? Hint: Draw a cash-flow diagram from the perspective of the lender. O C. $3,000 0 $3,000 0 1 1 2 3 2 3 $254.95. 14 15 $254.95.. 15 16 Q a Q O D. $3,000 $3,000 1 1 2 2 3 3 $254.95. 14 15 $254.95. 15 16 Q Q
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:The nominal interest rate is % per year. (Round to one decimal place.)
The effective interest rate is% per year. (Round to one decimal place.)
Transcribed Image Text:A loan of $3,000 for a new, high-end laptop computer is to be repaid in 15 end-of-month payments (starting one month from now). The monthly payments are determined as follows.
Loan principal
Interest for 15 months at 1.5% per month
Loan application fee
Total
Monthly payment = $3,824.25/15 = $254.95
What nominal and effective interest rates per year are actually being paid? Hint: Draw a cash-flow diagram from the perspective of the lender.
O C.
$3,000
0
$3,000
1
0
2
1
7--
3
$254.95.
HI
2
3
$254.95_
14 15
15 16
Q
Q
Q
Q
C
O D.
$3,000
$3,000
1
$3,000
675.00
149.25
$3,824.25
1
2 3
2
3
$254.95.
14
$254.95__
15
15
16
Q
Q
Q
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