A design studio received a loan of $5,050 at 5.30% compounded semi-annually to purchase a camera...

A design studio received a loan of $5,050 at 5.30% compounded semi-annually to purchase a camera and settled the loan in 2 years by making quarterly payments.

a. What was the size of the payments?

b. What was the interest portion on the first payment?

c. What was the balance of the loan at end of the first year?

d. What was the interest portion on the last payment?

Solutions

Expert Solution

Interest rate of 5.3% compounded semi annually is equivalent to 5.265345% compounded quarterly, as follows:

Part (a):

Quarterly payments= $ 669.21 as follows:

Part (b):

Interest portion on the first payment= $66.47

Amortization schedule as follows:

Part (c):

Balance of the loan at end of the first year= $2,591.03 as in the amortization schedule above

Part (d):

Interest portion on the last payment = $8.69 as in the amortization schedule above

jeff jeffy answered 1 year ago

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