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Bank granted a 3 year credit. Each fixed installment in amount of PLN 90,000 is paid...

Bank granted a 3 year credit. Each fixed installment in amount of PLN 90,000 is paid at the begining of each 4M. The bank offers also equilibrium rate under quarterly capitalization equaling 12% p.a. Find the rate applicable to the credit offered by the bank and calculate the principal amount of this credit.

Solutions

Expert Solution

The rate i.e. applicable to the credit offered by the bank as follows:

= 12% / 4 quarters in a year

= 3%

The computation of the principal amount is shown below:

Here we applied the present value formula

Given that

RATE = 12% / 4 = 3%

NPER = 3 * 4 = 12

PMT = 90,000

FV = 0

The formula is shown below:

= -PV(RATE,NPER,PMT,FV,TYPE)

After applying the above formula, the present value is 922,736.17

jeff jeffy answered 2 years ago
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