How large must each annual payment be if the loan is for $20,000? Assume that the interest rate remains at 7% and that the loan is still paid off over 5 years. Round your answer to the nearest cent. $ How large must each payment be if the loan is for $20,000, the interest rate is 7%, and the loan is paid off in equal installments at the end of each of the next 10 years? This loan is for the same amount as the loan in part b, but the payments are spread out over twice as many periods. Round your answer to the nearest cent. $ Why are these payments not half as large as the payments on the loan in part b? -Select- V IV III II I Item 26 Because the payments are spread out over a longer time period, more interest must be paid on the loan, which raises the amount of each payment. II. Because the payments are spread out over a longer time period, more principal must be paid on the loan, which raises the amount of each payment. III. Because the payments are spread out over a longer time period, less interest is paid on the loan, which raises the amount of each payment. IV. Because the payments are spread out over a longer time period, less interest is paid on the loan, which lowers the amount of each payment. V. Because the payments are spread out over a shorter time period, more interest is paid on the loan, which lowers the amount of each payment.
How large must each annual payment be if the loan is for $20,000? Assume that the interest rate remains at 7% and that the loan is still paid off over 5 years. Round your answer to the nearest cent. $ How large must each payment be if the loan is for $20,000, the interest rate is 7%, and the loan is paid off in equal installments at the end of each of the next 10 years? This loan is for the same amount as the loan in part b, but the payments are spread out over twice as many periods. Round your answer to the nearest cent. $ Why are these payments not half as large as the payments on the loan in part b? -Select- V IV III II I Item 26 Because the payments are spread out over a longer time period, more interest must be paid on the loan, which raises the amount of each payment. II. Because the payments are spread out over a longer time period, more principal must be paid on the loan, which raises the amount of each payment. III. Because the payments are spread out over a longer time period, less interest is paid on the loan, which raises the amount of each payment. IV. Because the payments are spread out over a longer time period, less interest is paid on the loan, which lowers the amount of each payment. V. Because the payments are spread out over a shorter time period, more interest is paid on the loan, which lowers the amount of each payment.
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
Consider a $10,000 loan to be repaid in equal installments at the end of each of the next 5 years. The interest rate is 7%.
(This is the second part of the last question you answered)
- How large must each annual payment be if the loan is for $20,000? Assume that the interest rate remains at 7% and that the loan is still paid off over 5 years. Round your answer to the nearest cent.
$ - How large must each payment be if the loan is for $20,000, the interest rate is 7%, and the loan is paid off in equal installments at the end of each of the next 10 years? This loan is for the same amount as the loan in part b, but the payments are spread out over twice as many periods. Round your answer to the nearest cent.
$
Why are these payments not half as large as the payments on the loan in part b?
-Select- V IV III II I Item 26
Because the payments are spread out over a longer time period, more interest must be paid on the loan, which raises the amount of each payment.
II. Because the payments are spread out over a longer time period, more principal must be paid on the loan, which raises the amount of each payment.
III. Because the payments are spread out over a longer time period, less interest is paid on the loan, which raises the amount of each payment.
IV. Because the payments are spread out over a longer time period, less interest is paid on the loan, which lowers the amount of each payment.
V. Because the payments are spread out over a shorter time period, more interest is paid on the loan, which lowers the amount of each payment.
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