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Unformatted text preview: 1 value of a 4 period annuity with payment C = 136 : 51 : After period 6, the balance is just the present value of a 2 period annuity with payment2 C = 136 : 51 Balance after period 4: B 4 = C 1 r 1 & & 1 1 + r 4 ! Balance after period 6: B 6 = C 1 r 1 & & 1 1 + r 2 ! Thus, the principal reduction is: B 4 & B 6 = C 1 r 1 & & 1 1 + r 4 ! & C 1 r 1 & & 1 1 + r 2 ! = C r & 1 1 + r 2 & & 1 1 + r 4 ! = 254 : 75 2...
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This note was uploaded on 10/02/2009 for the course UGBA 08547 taught by Professor Odean during the Spring '09 term at University of California, Berkeley.
 Spring '09
 ODEAN

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