6. Alex loans Nomar $200,000 at a rate of 4% nominal interest convertible quarte

Question

6. Alex loans Nomar $200,000 at a rate of 4% nominal interest convertible quarterly. They agree that Nomar will repay the loan by making quarterly payments. These payments will each be $25,000 except for the last payment which will be a drop payment. Find the total length of the loan and the amount of the final payment.

7. In the previous problem, suppose that the parties decide that they would prefer to decrease the loan term by one period by opting for a balloon payment rather than a drop payment. Find the amount of the balloon payment.

Explanation / Answer

6.A 7.C

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