Question

In: Economics

What nominal interest rate is being charged if a loan of $13,500 must be repaid using...

What nominal interest rate is being charged if a loan of $13,500 must be repaid using end of the month equal payments of $ 395over 40 months

Solutions

Expert Solution

Given Information :

Loan Amount (P=Principal)= $13500

Have to repaid using end of the month equal payments of $395 .

Paid over in 40 Months(A)= 395 * 40

= 15800

So Intrest will be = A-P

=15800-13500

= 2300

$2300= 13500*R*40/100

2300/135*40=R

2300/5400=R

R=0.42592592592 0.426%


Related Solutions

A loan will be repaid in 5 years with monthly payments at a nominal interest rate...
A loan will be repaid in 5 years with monthly payments at a nominal interest rate of 9% monthly convertible. The first payment is $1000 and is to be paid one month from the date of the loan. Each succeeding monthly payment will be 2% lower than the prior payment. Calculate the outstanding loan balance immediately after the 40th payment is made.
Mary has a 6,000 loan and is being charged an interest rate of 8% convertible monthly...
Mary has a 6,000 loan and is being charged an interest rate of 8% convertible monthly for a term of four years. At the end of each month, Mary pays only half of the interest due. However, along with the tenth payment, Mary pays 3,000. What is her outstanding balance immediately after the tenth payment?
You are given a loan with a nominal interest rate of 5%. You must pay back...
You are given a loan with a nominal interest rate of 5%. You must pay back this loan one year from now. Over the next year inflation is at 4%. In real terms what is the effective interest rate you must pay the loan back at after adjusting for inflation?
If the nominal interest rate is 5% in 2019, what is the real interest rate using...
If the nominal interest rate is 5% in 2019, what is the real interest rate using the inflation rate between 2018 and 2019?
A loan is being repaid by the amortization method with an installment at the end of...
A loan is being repaid by the amortization method with an installment at the end of each 80 quarters at 6% annual effective interest, the first payment one quarter after the loan is made. In which payment are the principal and the interest most nearly equal to each other? ANS: 33 Please show the steps.
A loan of 11000 is made with interest at a nominal annual rate of 12% compounded...
A loan of 11000 is made with interest at a nominal annual rate of 12% compounded monthly. The loan is to be repaid by 36 monthly payments of 367.21 over 37 months, starting one month after the loan is made, there being a payment at the end of every month but one. At the end of which month is the missing payment? For your reference, the answer is at the 17th month.
Answer the following: A bank makes a loan at a 7.0% nominal interest rate to a...
Answer the following: A bank makes a loan at a 7.0% nominal interest rate to a business. For each of the following scenarios, calculated the expected and actual real interest rates on the loan and state whether the bank is better-off, worse-off, or just as well-off as it expected. Inflation was expected to be 4%, but actual inflation was 2% Inflation was expected to be 3%, but actual inflation was 3% Inflation was expected to be 2% and actual inflation...
Amy receives a home improvement loan of $10,000. The loan has a nominal interest rate convertible...
Amy receives a home improvement loan of $10,000. The loan has a nominal interest rate convertible monthly of i(12) = 6%. The term of the loan is three years and Amy is expected to make level end-of-month payments, except that she is allowed to miss one payment so long as she then pays higher level payments for the remainder of the three years, so as to have repaid the loan at the end of the three-year period. Suppose Amy misses...
The nominal exchange rate is the nominal interest rate in one country divided by the nominal interest...
The nominal exchange rate is the nominal interest rate in one country divided by the nominal interest rate in the other country. the ratio of a foreign country's interest rate to the domestic interest rate. rate at which a person can trade the currency of one country for another. the real exchange rate minus the inflation rate.
What is the real rate of interest? Differentiate it from the nominal rate of interest for...
What is the real rate of interest? Differentiate it from the nominal rate of interest for the risk-free asset, a 3-month U.S. Treasury Bill.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT