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Suppose you have $250,000 of loan. The terms of the loan are that the yearly interest...

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Finance

Suppose you have $250,000 of loan. The terms of the loan arethat the yearly interest is 6% compounded quarterly. You are tomake equal quarterly payments of suchmagnitude as to repay this loan over 30 years.

(Keep all your answers to 2 decimal places, e.g. XX.12.)

(a) How much are the quarterly payments?

(b)  After 5 years' payments, what principal remainsto be paid?

(c) How much interest is paid in the first quarter of the6th year?

(d) How much is the total interest paid over the 30 years?

(e) If you have a lump sum payment of $20,000 at the end of 5years, and maintain the same level of quarterly payment, when willyou pay off your loan, i.e. how many years in total will you payoff the loan?

Answer & Explanation Solved by verified expert
4.0 Ratings (792 Votes)
a How much are the quarterly payments Present value of the loan 250000 Interest r6 pa ie 15 per quarter or 0015 n 30 yrs 304120 quarterly compounding periods Now Using PV of ordinaryqtrlyperiodend annuity formula PVQuarterly Pmt11rnr substituting the known values 250000Qpmt110151200015 Solving the    See Answer
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