Suppose you are borrowing $25,000 and makingmonthly payments with 1% interest. Show that themonthly payments should equal $556.11. The keyrelationships are that for any month t(Ending month t balance)= (Ending month t - 1 balance)- ((Monthly payment) - (Month t interest))(Month t interest) = (Beginning month t balance)x (Monthly interest rate)Of course, the ending month 60 balance must equal 0.
Suppose you are borrowing $25,000 and makingmonthly payments with 1% interest. Show that themonthly payments should equal $556.11. The keyrelationships are that for any month t(Ending month t balance)= (Ending month t - 1 balance)- ((Monthly payment) - (Month t interest))(Month t interest) = (Beginning month t balance)x (Monthly interest rate)Of course, the ending month 60 balance must equal 0.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Suppose you are borrowing $25,000 and making
monthly payments with 1% interest. Show that the
monthly payments should equal $556.11. The key
relationships are that for any month t
(Ending month t balance)
= (Ending month t - 1 balance)
- ((Monthly payment) - (Month t interest))
(Month t interest) = (Beginning month t balance)
x (Monthly interest rate)
Of course, the ending month 60 balance must equal 0.
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