What are the interest payments on a $1,000 loan if the contractual rate is 12%,
ID: 2761148 • Letter: W
Question
What are the interest payments on a $1,000 loan if the contractual rate is 12%, the loan will be paid back in four uniform principal payments at the end of the next four years, and the remaining balance method of calculating interest will be used? What is the actuarial, annual percentage, and the effective interest rate? (AIR, APR, ie =12%)
What is the annual loan payment in the third year?
A. $329
B. $60
C. $250
D. $310
E. None of the above
What is the loan balance at the end of the third year?
A. $329
B. $60
C. $250
D. $310
E. None of the above
What is the interest payment in the fourth year?
A. $329
B. $60
C. $250
D. $310
E. None of the above
What is the principal payment in the second year?
A. $329
B. $60
C. $250
D. $310
E. None of the above
What is the actuarial rate?
A. 12%
B. 12.5%
C. 3%
D. 13.3%
E. None of the above
What is the APR?
A. 12%
B. 12.5%
C. 3%
D. 13.3%
E. None of the above
What is the effective rate?
A. 12%
B. 12.5%
C. 3%
D. 13.3%
E. None of the above
Explanation / Answer
What is the annual loan payment in the third year?-250+60=310
What is the loan balance at the end of the third year-250
What is the interest payment in the fourth year?-30
Principal payment in second year -250
APR-12%
Effective-12%
Period Opening balance Interest Principal repaid Closing Balance 1 1000 120 250 750 2 750 90 250 500 3 500 60 250 250 4 250 30 250 0Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.