Jan borrows $4,000 to buy a new digital camera. The loan is to be repaid with four equal semiannual payments. The nominal interest rate for the first year of the loan is 9% per year compounded monthly. The nominal interest rate for the second year of the loan is 12% per year compounded quarterly. Determine the dollar amount of the four equal semiannual payments. Note: I want to make sure the timing of the payments is clear. The payments are semiannual so the 1st payment occurs 1/2 year after the loan is taken out, the 2nd occurs 1 year after the loan is taken out, the 3rd and 4th occur after 1 1/2 years and 2 years, respectively.

Jan borrows $4,000 to buy a new digital camera. The loan is to be repaid with four equal semiannual payments. The nominal interest rate for the first year of the loan is 9% per year compounded monthly. The nominal interest rate for the second year of the loan is 12% per year compounded quarterly. Determine the dollar amount of the four equal semiannual payments. Note: I want to make sure the timing of the payments is clear. The payments are semiannual so the 1st payment occurs 1/2 year after the loan is taken out, the 2nd occurs 1 year after the loan is taken out, the 3rd and 4th occur after 1 1/2 years and 2 years, respectively.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

3. Jan borrows $4,000 to buy a new digital camera. The loan is to be repaid with four equal semiannual
payments. The nominal interest rate for the first year of the loan is 9% per year compounded monthly.
The nominal interest rate for the second year of the loan is 12% per year compounded quarterly.
Determine the dollar amount of the four equal semiannual payments. Note: I want to make sure the
timing of the payments is clear. The payments are semiannual so the 1st payment occurs 1/2 year after
the loan is taken out, the 2nd occurs 1 year after the loan is taken out, the 3rd and 4th occur after 1 1/2
years and 2 years, respectively.

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