Jean takes out a loan to be repaid in 120 monthly payments of $3,000 each, the first payment being due one month after the date of the loan. The nominal annual interest rate is 6%, convertible monthly. Immediately after making the 60th payment, Jean negotiates to pay bank a lump sum of $150,000 to pay off the loan. Determine the effective annual yield to the lender over the life of the loan. Possible Answers A <5.0% B ≥5.0% but <5.3% c≥5.3% but < 5.6%

Jean takes out a loan to be repaid in 120 monthly payments of $3,000 each, the first payment being due one month after the date of the loan. The nominal annual interest rate is 6%, convertible monthly. Immediately after making the 60th payment, Jean negotiates to pay bank a lump sum of $150,000 to pay off the loan. Determine the effective annual yield to the lender over the life of the loan. Possible Answers A <5.0% B ≥5.0% but <5.3% c≥5.3% but < 5.6%

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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