Alex and Beatrice each borrow $10,000 at an annual effective interest rate of 8%.

Alex and Beatrice each borrow $10,000 at an annual effective interest rate of 8%. Alex makes a payment of $1,000 at the end of each year, and Beatrice makes a payment of $500 at the end of each half year. Both borrowers will pay a final, smaller payment at the end of the loan (a "drop payment"). Determine the total amount of interest paid by the two borrowers.

Expert Solution

Alex - Total interest = $10,915.42

Beatrice - Total Interest = $ 10,518.04

Total interest by both = $21,433.46

jeff jeffy answered 2 years ago

1.a The annual interest rate is 8% with annual compounding. Please calculate effective annual rate, effective...

1.a The annual interest rate is 8% with annual compounding. Please calculate effective annual rate, effective semi-annual rate, effective quarterly rate, effective monthly rate, effective weekly rate (1 year = 52 weeks), effective daily rate (1 year = 365 days). 1.b The annual interest rate is 8% with monthly compounding. Please calculate effective monthly rate, effective annual rate, effective semi-annual rate, effective quarterly rate.

You borrow $10,000 on 1/1/2020, at the annual interest rate of 4%, and will repay in...

You borrow $10,000 on 1/1/2020, at the annual interest rate of 4%, and will repay in 10 annual installments, beginning on 12/31/2020, and continuing at the end of each year for subsequent years. The installments are not level, but will increase at an annual rate of 3% with the first payment of $x. Thus, the second payment will be $x(1.03), the third payment will be $x(1.03)2, etc. (a) Calculate $x. (b) What is the total amount of payments? (Just add the payments, without interest.) (c) What...

Bob borrowed $10,000 at an effective annual rate of interest of 7%. Bob’s plan was to...

Bob borrowed $10,000 at an effective annual rate of interest of 7%. Bob’s plan was to repay the loan with equal principal repayments plus interest at the end of each year for 20 years. After the 10th payment, Bob decides to change his payment scheme and pay the outstanding balance with equal annual payments. The loan will still be repaid in 20 years. Calculate the difference between the 10th and 11th payment. Less than 174 At least 174, but less...

Simple and compound interest rate 8. Determine the effective interest rate, based on a 15% annual...

Simple and compound interest rate 8. Determine the effective interest rate, based on a 15% annual rate with monthly capitalization: a) effective monthly rate, b) effective quarterly rate, c) semi-annual effective rate, d) annual rate effective. 9. Determine the effective annual interest rate, based on the nominal interest rate that is provided: a) 9% per year with capitalization annually, b) 6.8% per year with capitalization semi-annually, c) 11% per year with capitalization monthly. 10. Determine the semi-annual effective interest rate,...

effective annual interest rate

You have received a loan from a bank with a quoted rate of 18 percent compounded monthly. What is the Effective annual interest rate of the loan?

You borrow $100,000 and make annual payments for 5 years. The interest rate is 8%. How...

You borrow $100,000 and make annual payments for 5 years. The interest rate is 8%. How much interest do you pay in year 2? PLEASE EXPLAIN STEP BY STEP HOW YOU SOLVE WITH ONLY YOUR FINANCIAL CALCULATOR

Question 1 I. You plan to borrow $35,000 at an 8% annual interest rate. The terms...

Question 1 I. You plan to borrow $35,000 at an 8% annual interest rate. The terms require you to amortize the loan with 6 equal end-of- year payments. a) Calculate the amount of annual payment you would be paying every year? b) Set-up an amortization schedule. II. Allied Bank offers to lend you at a nominal rate of 5.0%, simple interest, with interest paid quarterly. Standard Bank offers to lend you the same amount, but it will charge 6.0%,...

What is the effective annual rate of 8% compounded daily?

If you borrow $7400 at $700 interest for one year, what is your effective interest rate...

If you borrow $7400 at $700 interest for one year, what is your effective interest rate for the following payment plans? (Input your answers as a percent rounded to 2 decimal places.) Effective Rate of Interest a. Annual payment % b. Semiannual payments % c.Quarterly payments % d. Monthly payments %

The effective semi-annual interest rate is 5%. The equivalent effective monthly rate is ___________ (Carry out...

The effective semi-annual interest rate is 5%. The equivalent effective monthly rate is ___________ (Carry out 4 places after the decimal point, and write the answer as a decimal)

Question