Answered: find i (the rate per period) and n (the…

find i (the rate per period) and n (the number of periods) for each loan at the given annual rate. Monthly payments of $245.65 are made for 4 years to repay a loan at 7.2% compounded monthly.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 41P

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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

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In the problem, find i (the rate per period) and n (the number of periods) for each loan at the given annual rate.

Monthly payments of $245.65 are made for 4 years to repay a loan at 7.2% compounded monthly.

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