(d) Repeat the process with the loan split into two 3 year loans. Round to the nearest dollar. End of Year Future Value, $ 3 6 By splitting the loan into two 3 year loans, you will pay s more in interest. X
(d) Repeat the process with the loan split into two 3 year loans. Round to the nearest dollar. End of Year Future Value, $ 3 6 By splitting the loan into two 3 year loans, you will pay s more in interest. X
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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Question
repeat the process with the loan split into two 3 year loans, how much more will you pay in interest?
Transcribed Image Text:Suppose you have borrowed $15,300 for school expenses at 7% simple interest Español
6 years.
Part 1 of 4
(a) How much simple interest would you pay?
After 6 years, you would pay $ 6426 in simple interest.
Part 2 of 4
(b) Suppose the bank splits the loan into six 1-year loans, so that the
future value of the loan would be recalculated at the end of each one-year
period, with interest charged on the new amount for the next year. Fill in
the following table, which will show the future value of the loan at the end
of each 1-year period. Round to the nearest dollar.
End of Year
Future Value, $
Alternate Answer:
1
Future Value, $ 16,371
End of Year
Part 3 of 4
Part: 3/4
Part 4 of 4
End of Year
1
Future Value, $
16371 17517
2
3
2
17,517
(...)
3
18,743
3
18743
4
6
4
20,055
-Ⓡ
20055 21459
5
(c) How much more interest would you pay with the loan being split up this
way?
By splitting the loan into six 1-year loans, you will pay $1235 more in interest.
5
By splitting the loan into two 3 year loans, you will pay
more in interest.
21,459
6
(d) Repeat the process with the loan split into two 3 year loans. Round to
the nearest dollar.
22961
6
22,961
X
B
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