Real interest on loan = (1.04/1.08)-1=-3.7% or -4%
Real value of principal repayment = 600/(1.08^2)=$514.40
Hence the creditor loses as the principal payment is less.
Suppose you borrow $600 of principal that must be repaid at the end of two years,...
8. Prepare the loan amortization schedule ($15) You borrow $1,000, and the loan is to be repaid in three equal payments at the end of each of the next three years. The lender charges a 6 percent interest rate on the loan balance that is outstanding at the beginning of each year. 1) Calculate the payment the firm must repay each year. 2) Prepare the loan amortization schedule (fill all the numbers in each cell). Repayment of Remaining Principal Beginning...
8. Prepare the loan amortization schedule ($15) You borrow $1,000, and the loan is to be repaid in three equal payments at the end of each of the next three years. The lender charges a 6 percent interest rate on the loan balance that is outstanding at the beginning of each year. 1) Calculate the payment the firm must repay each year. 2) Prepare the loan amortization schedule (fill all the numbers in each cell). Beginning Amount Repayment of Principal...
8. Prepare the loan amortization schedule ($15) You borrow $1,000, and the loan is to be repaid in three equal payments at the end of each of the next three years. The lender charges a 6 percent interest rate on the loan balance that is outstanding at the beginning of each year. 1) Calculate the payment the firm must repay each year. 2) Prepare the loan amortization schedule (fill all the numbers in each cell). Beginning Amount Repayment of Remaining...
Suppose you were borrowing money to buy a car. Consider the following situations. Situation 1: Suppose the interest rate on your car loan is 17.00 percent and the inflation rate is 16.00 percent. Calculate the real interest rate. 1%. (Enter your response as a percentage rounded to two decimal places.) Situation 2: Suppose the interest rate on your car loan is 7.00 percent and the inflation rate is 4.00 percent. Calculate the real interest rate. 3 %. (Enter your response...
Suppose you were borrowing money to buy a car. Consider the following situations. %. (Enter your Situation 1: Suppose the interest rate on your car loan is 17.00 percent and the inflation rate is 16.00 percent. Calculate the real interest rate. response as a percentage rounded to two decimal places.) %. (Enter your Situation 2: Suppose the interest rate on your car loan is 7.00 percent and the inflation rate is 4.00 percent. Calculate the real interest rate. response as...
Suppose you were borrowing money to buy a car. Consider the following situations. %. (Enter your Situation 1: Suppose the interest rate on your car loan is 17.00 percent and the inflation rate is 16.00 percent. Calculate the real interest rate. response as a percentage rounded to two decimal places.) %. (Enter your Situation 2: Suppose the interest rate on your car loan is 7.00 percent and the inflation rate is 4.00 percent. Calculate the real interest rate. response as...
Question 3: Jan Jacobs can borrow $2,000 to be repaid in equal annual end-of-year amounts of $600 for the next 5 years. Help her find the interest rate on this loan (approximate your result to two decimal digits, show an excel sheet of your numerical work).
Imagine you borrow $600 from your roommate, agreeing to pay her back $600 plus 7 percent nominal interest in one year. Assume inflation over the life of the contract is expected to be 4.62 percent. What is the total dollar amount you will have to pay her back in a year? What approximate percentage of the interest payment is the result of the real rate of interest?
QUESTION 4 You are given two loans, with each loan to be repaid by a single payment in the future. Each payment includes both principal and interest. The first loan is repaid by a 3000 payment at the end of four years. The interest is accrued at an annual nominal rate of discount equal to 5% compounded semiannually. The second loan is repaid by a 4000 payment at the end of five years. The interest is accrued at an annual...
In each part that follows, use the economic data given to find national saving, private saving, public saving, and the national saving rate. a. Household saving = 200 Business saving = 400 Government purchases of goods and services =100 Government transfers and Interest payments = 100 Tax collections = 150 GDP = 2,200 Instructions: Enter your response for the national saving rate rounded to one decimal place. If you are entering any negative numbers, be sure to Include a (-) In front of those numbers. b....