Consider a 48 month amortizing car loan with 6% APR and monthly payments. Which of the following statements is FALSE about that loan?A. The monthly payment includes both interest and principal.B. Interest portion of the payment equals loan balance times monthly interest rate.C. The monthly interest rate charged on the loan is 0.5%.D. The effective annual rate on that loan is less than 6%.

Effective annual rate = (1+Monthly interest rate)12-1

Answered: Consider a 48 month amortizing car loan…

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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Consider a home mortgage of $150,000 at a fixed APR of 6% for 30 years. a. Calculate the monthly payment. b. Determine the total amount paid over the term of the loan. c. Of the total amount paid, what percentage is paid toward the principal and what percentage is paid for interest. a. The monthly payment is $ (Do not round until the final answer. Then round to the nearest cent as needed.) b. The total payment over the term of the loan is $ (Round to the nearest cent as needed.) c. Of the total payment over the term of the loan, (Round to the nearest tenth as needed.) % is paid toward the principal and % is paid toward interest.
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Am. 327.

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