Chapter4: Time Value Of Money
Section4.17: Amortized Loans
Problem 1ST
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Question
A present obligation amounting to ₱150,000 is to be repaid for 4 years at a rate of 12% per year. The borrower has three options to repay the money, what would you recommend?
a. Pay the interest and principal in one payment at the end of the period.
b. Pay interest due to at the end of each period and the principal at the end of the 4th year.
c. Pay 50% of the principal at the end of the first year and 50% at the end of the 4th year. The interest will be paid at each end of the year
![PROBLEM 3. A present obligation
amounting to P150,000 is to be repaid for
4 years at a rate of 12% per year. The
borrower has three options to repay the
money, what would you recommend?
a. Pay the interest and principal in one
payment at the end of the period.
b. Pay interest due to at the end of each
period and the principal at the end of the
4th year.
c. Pay 50% of the principal at the end of
the first year and 50% at the end of the
4th year. The interest will be paid at each
end of the year](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F028f29a6-4649-4770-9696-3b968bda23ab%2Ffce3cabb-ce24-4fce-a7a9-3eb12fca79fd%2Fa9plc2f_processed.jpeg&w=3840&q=75)
Transcribed Image Text:PROBLEM 3. A present obligation
amounting to P150,000 is to be repaid for
4 years at a rate of 12% per year. The
borrower has three options to repay the
money, what would you recommend?
a. Pay the interest and principal in one
payment at the end of the period.
b. Pay interest due to at the end of each
period and the principal at the end of the
4th year.
c. Pay 50% of the principal at the end of
the first year and 50% at the end of the
4th year. The interest will be paid at each
end of the year
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