If you borrow $2,400 and agree to repay the loan in four equal annual payments at an interest rate of 10%, what will your payment be? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Amount of payment . What if you make the first payment on the loan immediately instead of at the end of the first year? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Repayment amount %24

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
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### Loan Repayment Exercise

#### Scenario:
You have borrowed $2,400 and need to repay the loan through four equal annual payments at an interest rate of 10%. Your task is to calculate the payment amount under two different scenarios.

#### Question a:
**If you repay the loan in four equal annual payments with an interest rate of 10%, what will your payment be?**

- Calculate without rounding intermediate calculations.
- Round your final answer to two decimal places.

**Answer:**

- **Amount of Payment:** $ [Your Answer Here]

#### Question b:
**What if the first payment is made immediately instead of at the end of the first year?**

- Calculate without rounding intermediate calculations.
- Round your final answer to two decimal places.

**Answer:**

- **Repayment Amount:** $ [Your Answer Here]

This exercise involves understanding the concepts of loan amortization and present value of annuities.
Transcribed Image Text:### Loan Repayment Exercise #### Scenario: You have borrowed $2,400 and need to repay the loan through four equal annual payments at an interest rate of 10%. Your task is to calculate the payment amount under two different scenarios. #### Question a: **If you repay the loan in four equal annual payments with an interest rate of 10%, what will your payment be?** - Calculate without rounding intermediate calculations. - Round your final answer to two decimal places. **Answer:** - **Amount of Payment:** $ [Your Answer Here] #### Question b: **What if the first payment is made immediately instead of at the end of the first year?** - Calculate without rounding intermediate calculations. - Round your final answer to two decimal places. **Answer:** - **Repayment Amount:** $ [Your Answer Here] This exercise involves understanding the concepts of loan amortization and present value of annuities.
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