(a):
Calculate the equivalent monthly value.
(a):
Explanation of Solution
The borrowing (B) is $80,000. The interest rate (i1) is 6% per year and it is compounded semiannually for two payments. The effective interest rate 1 (Ei1) is 0.5%
The equivalent monthly value (A) can be calculated as follows:
The equivalent monthly value is $1,546.4.
(b):
Calculate the current balance.
(b):
Explanation of Solution
The interest payment in the first year can be calculated as follows:
The interest payment for the first year is $400.
The interest payment in the second year can be calculated as follows:
The interest payment for the second year is $394.27.
The current principal payment (CP) can be calculated as follows:
The current principal payment is $77,701.47.
(c):
Calculate the total interest payment.
(c):
Explanation of Solution
The total interest payment for the first two years can be calculated as follows:
The total interest payment for the first two years is $794.27.
(d):
Calculate the equivalent monthly value.
(d):
Explanation of Solution
The borrowing (B) is $80,000. The interest rate (i1) is 6% per year and it is compounded semiannually for two payments. The effective interest rate 1 (Ei1) is 0.5%
The equivalent monthly value (A) for second loan can be calculated as follows:
The equivalent monthly value is $1,437.94.
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