   Chapter 12.III, Problem 7RE ### Contemporary Mathematics for Busin...

8th Edition
Robert Brechner + 1 other
ISBN: 9781305585447

#### Solutions

Chapter
Section ### Contemporary Mathematics for Busin...

8th Edition
Robert Brechner + 1 other
ISBN: 9781305585447
Textbook Problem

# You have just been hired as a loan officer at the Eagle National Bank. Your first assignment is to calculate the amount of the periodic payment required to amortize (pay off) the following loans being considered by the bank (use Table 12-2). Loan Payment Term of Nominal Present Value Payment Period Loan (years) Kate (%) (Amount of Loan) 7. every 3 months 5 8 $5,500 To determine To calculate: The amount of loan payment where payment frequency is 3 months, the time duration is 5 years, the nominal rate of return is 8% and present value amount is$5,500.

Explanation

Given Information:

Payment frequency is 3 months, the time duration is 5 years, the nominal rate of return is 8% and present value amount is $5,500. Formula used: The formula to compute the loan payment is, Amortization payment=Original amount of obligationPresent value table factor Calculation: Consider that payment frequency is 3 months, the time duration is 5 years, the nominal rate of return is 8% and present value amount is$5,500.

The rate period is 2%(8%÷4 period per year).

The number of periods is 20(5 years×4 period per year)

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