i. How much interest will you pay on the loan ii. If the interest is compounded once a year instead of monthly, how much interest would you pay iii. What is the effective interest rate for the loan iv. How would the effective interest rate change if interest was compounded fortnightly instead of monthly? v. Generate a table to show how the Loan of 1million to 2million should be paid over 1 yr, 2yrs and 3yrs in successive quantums of 100,000 to enable any borrower to see what best fits their capability of repayment Formulae
i. How much interest will you pay on the loan ii. If the interest is compounded once a year instead of monthly, how much interest would you pay iii. What is the effective interest rate for the loan iv. How would the effective interest rate change if interest was compounded fortnightly instead of monthly? v. Generate a table to show how the Loan of 1million to 2million should be paid over 1 yr, 2yrs and 3yrs in successive quantums of 100,000 to enable any borrower to see what best fits their capability of repayment Formulae
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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Advanced MathQ&A LibraryYou borrow Ksh 1.2million to buy a new car. The lender charges 5% p.a. compounded at the end of each month. You intend to pay the loan off in 5 years. i. How much interest will you pay on the loanii. If the interest is compounded once a year instead of monthly, how much interest would you pay iii. What is the effective interest rate for the loan iv. How would the effective interest rate change if interest was compounded fortnightly instead of monthly? v. Generate a table to show how the Loan of 1million to 2million should be paid over 1 yr, 2yrs and 3yrs in successive quantums of 100,000 to enable any borrower to see what best fits their capability of repayment Formulae A = P(1 +i)n B =P(1+ i/m)mn C =(1+i/m)m- 1You borrow Ksh 1.2million to buy a new car. The lender charges 5% p.a. compounded at the end of each month. You intend to pay the loan off in 5 years. i. How much interest will you pay on the loanii. If the interest is compounded once a year instead of monthly, how much interest would you pay iii. What is the effective interest rate for the loan iv. How would the effective interest rate change if interest was compounded fortnightly instead of monthly? v. Generate a table to show how the Loan of 1million to 2million should be paid over 1 yr, 2yrs and 3yrs in successive quantums of 100,000 to enable any borrower to see what best fits their capability of repayment Formulae A = P(1 +i)n B =P(1+ i/m)mn C =(1+i/m)m- 1
Question
You borrow Ksh 1.2million to buy a new car. The lender charges 5% p.a. compounded at the end of each month. You intend to pay the loan off in 5 years.
i. How much interest will you pay on the loan
ii. If the interest is compounded once a year instead of monthly, how much interest would you pay
iii. What is the effective interest rate for the loan
iv. How would the effective interest rate change if interest was compounded fortnightly instead of monthly?
v. Generate a table to show how the Loan of 1million to 2million should be paid over 1 yr, 2yrs and 3yrs in successive quantums of 100,000 to enable any borrower to see what best fits their capability of repayment
Formulae
A = P(1 +i)n
B =P(1+ i/m)mn
C =(1+i/m)m- 1
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