Save Submit Assignment e Questi Problem 5 Check My Work (a rem Click here to rea

Question

Save Submit Assignment e Questi Problem 5 Check My Work (a rem Click here to read the eBlook: Comparing Interest Rates Click here to read the eBook: Amortized Loans LOAN AMORTIZATION AND EAR o. You want to buy a car, and al cal bank wil lend you $10,000 The loan will be fully amortized over S years 60 months and the m minal interest rate w-be 9% with interest paid month .What will be the monthly loan payment? Do not round intermediate steps. Round your answer to the nearest cent. 3 b, what will be the loan's EAA? Do not round intermediate steps. Round your answer to two decimal places.

Explanation / Answer

a.

Using financial calculator BA II Plus - Input details:

#

I/Y = Rate/Frequency =

0.750000

FV = Future value =

$0

N = Total payment term x Frequency =

                          60

PV = Present value of Loan =

-$10,000.00

CPT > PMT = Payment =

$207.58

Alternate formula-based method:

PMT = Payment = |PV| x R% x (1+R%)^N / ((1+R%)^N - 1) =

$207.58

b.

EAR = (1+Rate/12)^12 - 1 = (1+9%/12)^12-1 =

9.38%

Using financial calculator BA II Plus - Input details:

#

I/Y = Rate/Frequency =

0.750000

FV = Future value =

$0

N = Total payment term x Frequency =

                          60

PV = Present value of Loan =

-$10,000.00

CPT > PMT = Payment =

$207.58

Alternate formula-based method:

PMT = Payment = |PV| x R% x (1+R%)^N / ((1+R%)^N - 1) =

$207.58

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