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You borrow $1,000,000 at 3% compounded semi-annually and will pay it off over bi-weekly (every two weeks) payments for 25 years. What will your payments be?

You borrow $1,000,000 at 3% compounded semi-annually and will pay it off over bi-weekly (every two weeks) payments for 25 years. What will your payments be?

Essentials Of Investments
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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how to get "26" and ".0022"?

You borrow $1,000,000 at 3% compounded semi-annually and will pay it off over bi-weekly (every two weeks) payments for 25 years. What will your payments be? Note: remember to round interest rates to four positive decimal places, and to round factors to four decimal places. That is our convention in the course. Solution: A=1,000,000(A/P,ibw= (1+.03/2)2/26–1=.001146,N=25*26=650)=1,000,000(.0022)=2200 Note: if you don't round the factor your solution will be 2183. 2. N- 25 yax 26 = 650 A = Im (A le, i 25 ×26) = 2200 650 iow -(I+ ) -) = .00146
Transcribed Image Text:You borrow $1,000,000 at 3% compounded semi-annually and will pay it off over bi-weekly (every two weeks) payments for 25 years. What will your payments be? Note: remember to round interest rates to four positive decimal places, and to round factors to four decimal places. That is our convention in the course. Solution: A=1,000,000(A/P,ibw= (1+.03/2)2/26–1=.001146,N=25*26=650)=1,000,000(.0022)=2200 Note: if you don't round the factor your solution will be 2183. 2. N- 25 yax 26 = 650 A = Im (A le, i 25 ×26) = 2200 650 iow -(I+ ) -) = .00146
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