Question

casey obtained a business loan of $215000 at 5.21% compouded semi-annualy.
what was the size of semi-annual payments to be made over 25 years in order to pay off the loan?
calculate the interest paid on loan?

- mohawkcollege.ca x Homepage - Business Math of FX m Vretta X + mk/#/course-resource/section/7470/assignment/13918 - 551756 - Shandeep Singh on 13 (2) on 14(1) On 15 (1) on 16 (2) on 17 (2) on 18 (2) on 19 (2) on 20 (2) ion 21 (2) Ton 22 (2) Question 21 of 22 Casey obtained a business loan of $215,000 at 5.21% compounded semi- annually. a. What was the size of the semi-annual payments to be made over 25 years in order to pay off the loan? $0.00 DATE: ch 25th 11:59 pm Round to the nearest cent mit Print b. Calculate the interest paid on the loan ve Progress 5:35 PM 2020-03-25 - SWIFT * 8 5 o 6 2

Answer 1

Answer a.

Amount borrowed = $215,000

Annual interest rate = 5.21%
Semiannual interest rate = 2.605%

Time period = 25 years
Semiannual periods = 50

Let semiannual payment be $x

$215,000 = $x/1.02605 + $x/1.02605^2 + …. + $x/1.02605^49 + $x/1.02605^50
$215,000 = $x * (1 - (1/1.02605)^50) / 0.02605
$215,000 = $x * 27.776478
$x = $7,740.36

Semiannual payment = $7,740.36

Answer b.

Total amount paid = 50 * $7,740.36
Total amount paid = $387,018

Total interest paid = Total amount paid - Amount borrowed
Total interest paid = $387,018 - $215,000
Total interest paid = $172,018