Unformatted text preview: 2 u 95 100 v 1 2 U 100 u ± v 1 2 u .95 ± u 1 U i U u 1/2 u .95 i u u .95 U u 2 u 1 u 10.80% 2. The loan is repaid by 120 monthly payments of $100. The effective rate per month during the 1st 6 years is j u 1.04 1/12 u 1 u 0.32737%. The account balance after 6 years (72 months) is 100 s 720.32737% u 8104.46. The effective rate per month during the last 4 years is j u 1.03 1/12 u 1 u 0.24663%. The account balance after 10 years (120 months) is 100 s 720.32737% u 1.03 U 4 U 100 s 480.24663% u 9,121.64 U 5,089.01 u 14,210.66 12,000 u 1 U i U 10 u 14,210.66 ± i u 14,210.66 12,000 1/10 u 1 u 1.71% (annual effective yield) Balance if the money was not loaned: 12,000 u 1.04 U 6 u 1.03 U 4 u 17,089.53 Difference 17,089.53 u 14,210.66 u 2878.87...
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 Spring '09
 Chisholm
 Debt, Effective Interest Rate

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