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.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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