Lily borrows USD200,000 for 30 years at 6% annually. She agrees to make annual payments of USD12,000 for the first 10 years, and USD12,000 + P for the next 20 years. By answering the following questions correct to two decimal places, a. Find P. b. Find the outstanding loan balance at the end of 5 years. c. Find the outstanding loan balance at the end of 20 years. d. Find the total of interest amount paid of the loan over 30 years.

Lily borrows USD200,000 for 30 years at 6% annually. She agrees to make annual payments of USD12,000 for the first 10 years, and USD12,000 + P for the next 20 years. By answering the following questions correct to two decimal places, a. Find P. b. Find the outstanding loan balance at the end of 5 years. c. Find the outstanding loan balance at the end of 20 years. d. Find the total of interest amount paid of the loan over 30 years.

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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Concept explainers

Cost of Credit

The cost of credit is an extra amount that the borrower has to pay besides the loan amount. These credit charges may vary from loan to loan. The cost of credit includes interest charges, maintenance charges, and arrangement charges. Some of the costs are mandatorily collected by the lender based on the loan amount and tenure of the loan. The cost of credit is also called finance charges of the credit.

Question

Lily borrows USD200,000 for 30 years at 6% annually. She agrees to make
annual payments of USD12,000 for the first 10 years, and USD12,000 + P for
the next 20 years. By answering the following questions correct to two
decimal places,
a. Find P.
b. Find the outstanding loan balance at the end of 5 years.
c. Find the outstanding loan balance at the end of 20 years.
d. Find the total of interest amount paid of the loan over 30 years.

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