6. of each year. The anmual effective rate of the loan is 7%. If the principal repaid in the 3rd year was $400, find the amount of principal repaid from the 11th year to the 15th year (inclusive). A loan is to be repaid in 30 years with level annual payments made at the end

6. of each year. The anmual effective rate of the loan is 7%. If the principal repaid in the 3rd year was $400, find the amount of principal repaid from the 11th year to the 15th year (inclusive). A loan is to be repaid in 30 years with level annual payments made at the end

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter4: Time Value Of Money

Section4.17: Amortized Loans

Problem 1ST

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Concept explainers

Amortized Loans

The term "amortization" refers to spreading the value of a loan or a debt over a series of regular payments or installments comprising of both the principal and interest amount. It generally involves the process where in the value of a loan or an intangible asset is written down over its maturity period.

Question

A loan is to be repaid in 30 years with level annual payments made at the end
6.
of each year. The annual effective rate of the loan is 7%. If the principal repaid in the 3rd
year was $400, find the amount of principal repaid from the 11th year to the 15th year
(inclusive).

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