Quiz02revised - 3 You take out a 4 year loan for $1,000 The...

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UGBA103-F08 Monday, 22Sep-2008 Quiz II: Annuities and Loans UGBA 103 1. You are given a loan quote of 6% APR (semi-annually compounded). Convert this into an APR with quarterly compounding. Please write the APR with quarterly compounding in the box: 2. The quoted interest rate on a loan is 3% (quoted as an APR, compounded semiannually). Loan payments are made semiannually over 40 periods (i.e. 20 years). The first payment of $100 occurs after half a year. The required payments are shrinking by 20% every half a year (Thus, the required payment after one year is $80). What is the loan amount that has been taken out at time 0?
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Unformatted text preview: 3. You take out a 4 year loan for $1,000. The interest rate is 4% (quoted as an APR, compounded semiannually), and the loan requires you to make equal payments every 6 months for 4 years (i.e. the first payment will be 6 months from today, and there will be eight payments in all). How much of the principal is paid off in year 3 (i.e. with the 5 th and 6 th payment). Please write your answer in the box. Answer to #2: ____________________ Name: ________________ SID # : ________________ Section Number _________ Answer to #1: ____________________ Answer to #3: ____________________...
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