Christy takes out a four year loan from Bank A for $100,000 with annual repayments at the end of every year for 4 years. The annual effective interest rate is 2%. a) Write out the full amortization schedule with columns for payment, principle repaid, interest paid and outstanding loan balance for all four years. b) Suppose, at time 2 just after the second payment is made, the annual effective interest rate has risen to 6%. Bank A wishes to sell their right to the remaining payments to Bank B. What market price will they receive? (

Christy takes out a four year loan from Bank A for $100,000 with annual repayments at the end of every year for 4 years. The annual effective interest rate is 2%. a) Write out the full amortization schedule with columns for payment, principle repaid, interest paid and outstanding loan balance for all four years. b) Suppose, at time 2 just after the second payment is made, the annual effective interest rate has risen to 6%. Bank A wishes to sell their right to the remaining payments to Bank B. What market price will they receive? (

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter19: Lease And Intermediate-term Financing

Section: Chapter Questions

Problem 19P

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