Homework Answers
rate positively ..
| First we have to compute the annual effective rate than monthly compounding rate | ||||||||
| Computation of annual effective rate - | (1+2.8%/2)^2-1 | |||||||
| 2.820% | ||||||||
| Computation of monthly compounding rate = | (1+2.82%)^(1/12)-1 | |||||||
| 0.232% | ||||||||
| Now we have to compute the maximum amortization amount | ||||||||
| Put in finaical calculator- | ||||||||
| FV | 0 | |||||||
| PMT | -1300 | |||||||
| I | 0.232% | |||||||
| N | 20*12 | 240 | ||||||
| Compute PV | $239,033.52 | |||||||
| Therefore, answre = | $239,033.52 | |||||||
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