You want to buy a boat, and a local bank will lend you $25,000. The loan will be fully amortized over 5 years (60 months), and the nominal interest rate will be 6% with interest paid monthly. What will be the monthly loan payment? What will be the loan's EAR? Round your answer for the monthly loan payment to the nearest cent and for EAR to two decimal places.

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A: Future value is the value of an asset that grows after a specific period of time. The future value…

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A: Given:

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A: The monthly payment amount can be calculated with the help of present value of annuity function

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A: The computation of monthly payments:Hence, the monthly payment is 212.66.

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A: Concluding payment is calculated as under-

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A: Here we will first have to determine the amount of loan taken. We are provided with annual payments,…

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Q: Assume you graduate from college with $26,000 in student loans. If your interest rate is fixed at…

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Q: You want to buy a car, and a local bank will lend you $30,000. The loan would be fully amortized…

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A: Present worth is the value of the amount in current time which is expected to be paid or received in…

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Cost of Credit

The cost of credit is an extra amount that the borrower has to pay besides the loan amount. These credit charges may vary from loan to loan. The cost of credit includes interest charges, maintenance charges, and arrangement charges. Some of the costs are mandatorily collected by the lender based on the loan amount and tenure of the loan. The cost of credit is also called finance charges of the credit.